Finance Minister Moosa Zameer has announced that the Maldives has initiated discussions to refinance more than USD 1 billion in debt. Speaking to a parliamentary committee reviewing the 2025 budget, Zameer elaborated that the country has largely relied on bilateral relationships for its borrowing, which, according to him, facilitates more flexible repayment negotiations compared to traditional credit ratings.
“Discussions are underway for a USD 1.5 billion debt refinancing initiative aimed at creating fiscal space for the president’s commitments,” Zameer informed the committee. He further stated that the Maldives does not require external consultants for this refinancing process, as the negotiations can be managed directly through existing diplomatic channels.
Debt Refinancing and Climate Agreements
The minister detailed specific agreements currently being pursued, including the refinancing of USD 500 million in private debt, with a targeted completion date of 2026. He also highlighted a recent partnership formed during a COP meeting to tackle climate change, which involves refinancing Sukuk debt in exchange for commitments to environmental protections and legislative improvements. He indicated that reaching such an agreement could take approximately six months.
Additionally, Zameer confirmed that the Maldives is in the final stages of securing USD 100 million in budgetary support from an international partner, expressing confidence that the funds will be received shortly.
Credit Rating Downgrade and Fiscal Reforms
Addressing the recent downgrades by credit rating agencies such as Moody’s and Fitch, Zameer attributed these decisions to external pressures and speculative factors rather than any immediate fiscal crises. He reassured that the government’s fiscal strategy remains on track despite these downgrades.
In line with President Mohamed Muizzu’s fiscal policy, Zameer also provided updates on planned reforms to the subsidy system. He assured that the changes would not adversely affect low-income households. The revamped subsidy framework is expected to be finalised within the next six weeks, with a launch planned for next year.
Cost-Cutting Measures and Revenue Enhancement
As part of ongoing efforts to manage state finances, Zameer revealed that the government is exploring cost-cutting strategies, including outsourcing insurance for the Maldives Police Service and Maldives National Defence Force to external providers. He assured that this shift would not compromise the healthcare benefits for service members, as provisions will be made to ensure no out-of-pocket expenses, even if coverage limits are exceeded.
The minister also highlighted efforts to strengthen the Maldives Inland Revenue Authority to boost tax collection through necessary legislative amendments.
Budget Priorities for 2025
Zameer noted that the 2025 budget does not include detailed project allocations for individual islands, with the aim of reducing budgetary pressures and ensuring that the ministry’s financial objectives are achieved. This approach, according to the minister, will help streamline the country’s fiscal management in the coming year.
