The World Bank has projected a slight improvement in the Maldives’ medium-term economic outlook, driven by expectations surrounding the upcoming completion of the new terminal at Velana International Airport by mid-2025. However, the optimism is tempered by persistent concerns over rising debt, external vulnerabilities, and fiscal pressures.
According to the Maldives Development Update released in April 2025, real GDP growth is anticipated to reach 5.7 percent this year, supported by an expected increase in tourist arrivals facilitated by the airport’s expanded capacity. The new terminal at Velana International Airport, seen as a critical bottleneck in recent years, is expected to unlock additional visitor flows and sustain the Maldives’ core tourism-driven economy over the next few years.
Beyond the positive headline growth forecast, the report highlights mounting challenges. Despite the near-term boost, risks to the Maldives’ economic outlook are “heavily tilted to the downside.” The World Bank warns that limited external buffers, soaring external debt service obligations, and delayed fiscal reforms have left the country highly exposed to liquidity and solvency risks.
The completion of the Velana terminal arrives at a critical time. Official reserves, while having recovered slightly following a US$400 million currency swap with the Reserve Bank of India, remain historically low, covering just 1.7 months of imports. The Maldives also faces a steep rise in external debt service payments, projected to reach about US$1 billion in 2025, with a further jump to US$1.1 billion in 2026 due to major bond repayments.
The World Bank stressed that without a “deep fiscal consolidation” and a clear financing strategy, the Maldives could face a debt sustainability shock. Although recent measures, such as revisions to airport development fees and tourism taxes, have marginally improved revenue prospects, they are unlikely to offset the broader fiscal pressures in the absence of significant expenditure reforms.
Growth in tourism linked to the Velana Airport expansion offers a rare bright spot, yet the report cautions that global economic uncertainties could dampen this advantage. Heightened trade tensions, geopolitical instability, and a slowdown in key source markets, particularly China and Europe, could weaken tourism demand and, by extension, the country’s fragile economic recovery.
In this context, the Velana International Airport project symbolises both opportunity and vulnerability for the Maldives. While the expanded gateway promises to enhance connectivity and visitor numbers, the broader macroeconomic risks, unless managed prudently, could overshadow these gains.
