Zareer: Upcoming debt obligations not an insurmountable burden; current revenue enough

Finance Minister Hassan Zareer, on Sunday night, stated that the Maldives’ upcoming debt repayments do not account for an insurmountable burden, emphasizing that current state revenue is sufficient to meet the country’s financial obligations.

During the “Ahaa” public forum, a participant asked about the Ministry’s strategy for managing foreign debt repayments due in the coming years.

Responding to the query, the Minister said debt repayments are being managed through proactive preparations, including regular contributions to the Sovereign Development Fund (SDF). He noted that a significant portion of the country’s debt is denominated in foreign currency and highlighted ongoing legislative amendments aimed at increasing foreign currency inflows.

Zareer further stated that following the conclusion of the current fiscal year, there are no immediate large-scale debt obligations that cannot be met through national revenue. He assured that the specific difficulties encountered this year in meeting debt repayments would not be repeated and emphasized the government’s continued efforts to reduce public expenditure.

"Based on these initiatives, I believe that we do not foresee any insurmountable burden regarding debt repayment in the near future," Zareer said.

The remarks come following Moody’s Investors Service’s recent upgrade of the Maldives’ sovereign credit rating from Caa2 to Caa1, citing the government’s efforts toward debt repayment and financial stability. Moody’s noted the successful repayment of a USD 500 million sukuk in April, the settlement of two USD 50 million Treasury bills with the State Bank of India (SBI), and the closure of a USD 400 million currency swap facility. The repayment period for a USD 100 million loan from the Abu Dhabi Fund was also extended to 2031.

Following these settlements, the country’s external debt declined from USD 2.8 billion, equivalent to 35 percent of GDP, at the end of last year to USD 2.4 billion, or 30 percent of GDP, by the second quarter of this year.

Meanwhile, the Maldives has sought assistance from the World Bank and other international donors to strengthen foreign reserves and implement economic reforms amid challenges including rising fuel prices and fluctuations in tourism revenue.

Although total debt obligations for the year amount to USD 1.1 billion, the latest statistics from the Finance Ministry indicate that MVR 10.1 billion had been utilized for debt repayment as of October 8th.