The Government of Maldives has announced a fresh round of treasury bill (T-bill) offerings totalling MVR 1.25 billion, as it continues to rely heavily on short- to medium-term domestic borrowing to meet fiscal obligations. The invitation to subscribe, issued by the Ministry of Finance on 15 April 2025, comes against the backdrop of rising outstanding debt across multiple tenures.
The new T-bill tranche includes four instruments with maturities ranging from 28 days to one year:
- MVR 27 million at 3.50% for 28 days
- MVR 52.78 million at 3.87% for 98 days
- MVR 720 million at 4.23% for 182 days
- MVR 450 million at 4.60% for 364 days
This debt issuance is part of a pattern: updated figures from the Ministry’s Debt Management Department show total securities outstanding reached MVR 93.9 billion as of 7 April 2025. Of this, domestic instruments alone account for MVR 84.6 billion—nearly 90% of total outstanding government debt.
A Heavier Tilt Toward Short-Term Borrowing
The government’s growing dependence on T-bills is evident. Of the MVR 37.5 billion in T-bills outstanding, over MVR 28 billion is in 1-year instruments, while 3-month and 1-month maturities account for another MVR 2.8 billion. This concentration in short-term securities creates liquidity risks and rollover pressure, particularly as interest rates inch higher.
Commercial banks hold the largest share of these T-bills, with MVR 19.8 billion, followed by other financial corporations (MVR 15.9 billion), highlighting the crucial role of the domestic financial sector in financing public debt. The private sector and public non-financial corporations hold significantly smaller amounts.
Treasury Bonds and External Exposure
In addition to short-term instruments, the government has issued over MVR 36.8 billion in longer-term treasury bonds. Notably, around MVR 20.7 billion of these are set to mature in 15–20 years, suggesting a partial attempt to rebalance the debt portfolio towards longer tenures. However, external instruments make up just MVR 9.2 billion of the total, reflecting continued reliance on local borrowing over foreign capital markets.
Of the external instruments, Sukuk accounts for the lion’s share at MVR 7.7 billion, while conventional bonds make up the rest. These figures also point to limited diversification in debt sources.
Implications and Outlook
While tapping into local capital markets may offer flexibility and mitigate currency risks, the increasing volume of short-term debt raises sustainability concerns, especially if fiscal deficits remain wide. The government’s consistent issuance of T-bills with rising interest rates could also strain public finances in the long run.
The new round of offerings, with rates up to 4.60%, marks a slight uptick in yields, indicating tightening liquidity or increased risk perception. Analysts suggest that unless fiscal consolidation measures are adopted, the government may find itself caught in a costly cycle of debt servicing and refinancing.
