Maldives debt stands at MVR 152.7 billion despite major bond repayment

The government's debt burden eased during the second quarter of 2026 following the repayment of approximately $1 billion in external obligations, according to debt statistics released this week by the Ministry of Finance. However, rising domestic borrowing and large refinancing requirements continue to pose challenges.

At the end of the second quarter, total state debt stood at MVR 152.7 billion, equivalent to 122.7 per cent of gross domestic product (GDP).

The debt stock consists of MVR 133.6 billion in direct government debt and MVR 19.1 billion in government-guaranteed debt.

The debt-to-GDP ratio has declined from 133.4 per cent recorded near the end of 2024, indicating an improvement in the overall debt position.

The second quarter saw a significant reduction in external debt following the repayment of a foreign currency bond.

According to the statistics, foreign bond debt of MVR 7.7 billion, equivalent to $500 million, recorded during the first quarter was fully settled during the second quarter.

As a result, the government spent MVR 8.4 billion on external debt servicing during the quarter.

Following the repayment, total external debt declined from MVR 62.7 billion in the first quarter to MVR 55.4 billion by the end of the second quarter. External debt now accounts for 44.5 per cent of GDP.

While external debt declined, domestic debt continued to rise.

The Ministry of Finance reported that domestic debt reached MVR 97.3 billion at the end of the second quarter, representing 78.2 per cent of GDP.

Commercial banks remain the largest holders of government debt, with exposure totalling MVR 44 billion.

Government debt owed to the Maldives Monetary Authority (MMA) stood at MVR 14.4 billion, while a further MVR 32 billion was owed to other financial institutions, including the Maldives Pension Administration Office.

Treasury Bills remain the largest domestic borrowing instrument, accounting for MVR 54.4 billion of total domestic debt.

Government-guaranteed debt totalled MVR 19.1 billion at the end of the quarter.

The Housing Development Corporation (HDC) accounted for the largest share, with guaranteed debt of MVR 6.6 billion.

This was followed by guarantees of MVR 4.8 billion linked to the Reserve Bank of India (RBI) and MVR 3 billion related to Fahi Dhiriulhun Corporation (FDC).

Despite the decline in total debt and the reduction in external liabilities, refinancing risk remains a concern.

According to the statistics, 45.7 per cent of total government debt will either mature or require refinancing within the next 12 months.

Much of this exposure consists of short-term Treasury Bills issued in the domestic market.

The repayment of the $500 million bond has reduced one of the government's largest external debt obligations and improved the debt profile. However, the continued growth of domestic borrowing and the concentration of debt maturing within a short period indicate that financing pressures remain.

The latest figures suggest that while external debt obligations have eased, managing domestic debt and refinancing requirements will remain key challenges for public finances in the period ahead.