President Dr Mohamed Muizzu has outlined a plan to manage the USD 500 million Sukuk maturing in April through a combination of partial repayment and refinancing, aiming to avoid an increase in the country’s overall debt burden.
In his Presidential Address at the opening of the People’s Majlis, President Muizzu said USD 150 million of the Sukuk would be settled using foreign currency reserves accumulated in the Sovereign Development Fund (SDF), which currently holds more than USD 275 million. The remaining balance is expected to be refinanced at an interest rate not exceeding 9%.
The Sukuk represents the largest single external debt obligation facing the current administration, according to President Muizzu. It was issued by the previous government to repay a USD 250 million international bond raised in 2017, with the effective cost of the Sukuk rising to around 10.5%. The President described this liability as the most significant financial challenge inherited by his administration.
According to the President, preparations for the April repayment began immediately after the current government took office. He said the medium-term fiscal strategy includes greater reliance on funds already deposited in the SDF to service external obligations, with the intention of reducing the need for new borrowing and gradually lowering total debt levels.
The government has previously indicated that refinancing part of the Sukuk would involve issuing new debt. However, this approach comes against a challenging external financing backdrop. Both Fitch Ratings and Moody’s have downgraded the Maldives to non-investment grade status, raising concerns among analysts about the country’s ability to secure funding at favourable rates.
In his address, the President also said the government expects to receive USD 100 million in non-tax revenue within the next 45 days and has secured insurance coverage from highly rated international agencies to provide assurance to lenders. Discussions are also underway to raise an additional USD 150 million, with the government indicating that these arrangements are close to being finalised.
International financial institutions have repeatedly called for fiscal consolidation and structural reforms, particularly as total external debt repayments due this year exceed USD 1.1 billion. While such measures have yet to be fully implemented, the government has maintained that all upcoming obligations will be met on schedule.
