The Maldives’ public and publicly guaranteed (PPG) debt soared to MVR 148.9 billion by the end of the second quarter of 2025, representing a staggering 124% of the country’s Gross Domestic Product (GDP), according to the latest Debt Bulletin from the Ministry of Finance and Planning. This significant figure highlights growing concerns about the nation’s fiscal vulnerability and the increasing pressure of debt servicing costs.
Budgetary Central Government (BCG) debt constituted the largest portion, totaling MVR 127.8 billion. This was further divided into MVR 42.0 billion in external debt and MVR 85.8 billion in domestic debt. Domestic debt, at 71% of GDP, significantly outweighs external debt, which accounts for 35% of GDP. Adding to the overall debt burden, sovereign-guaranteed debt extended to state-owned enterprises and private entities reached MVR 21.1 billion, or 17.6% of GDP.
The substantial debt level translates into considerable debt service costs, placing a heavy strain on public finances. In Q2 2025, total PPG debt service amounted to MVR 3.5 billion. This comprised MVR 1.9 billion in principal repayments and MVR 1.6 billion in interest and other charges. A notable increase was observed in domestic debt service costs, with interest payments rising to MVR 843 million.
External debt is concentrated among a select group of creditors. The Export-Import Bank of India holds the largest share, followed by bondholders, the Export-Import Bank of China, and the Saudi Fund for Development. The majority (64%) of external debt is denominated in US dollars, with the remainder spread across Saudi riyal, Kuwaiti dinar, Chinese yuan, and euro.
The report emphasizes significant refinancing risks due to a large concentration of debt maturities between 2025 and 2035. This concentration exposes the government to considerable rollover pressures, requiring substantial refinancing efforts in the coming years. While the portfolio is largely fixed-rate, with 96% of debt insulated from immediate interest rate shocks, the weighted average interest rate of PPG debt stands at 4.3%, reflecting a gradual increase from previous years.
Adding to the complexity of the debt situation are subsidiary loans to state-owned enterprises, totaling MVR 12.3 billion. The Maldives Airports Company Limited accounts for the largest portion of this, with MVR 9.8 billion in loans. This raises concerns regarding contingent liabilities, as the government may be required to cover repayments if these enterprises face financial difficulties.
The Q2 2025 Debt Bulletin reveals a concerning picture of the Maldives’ fiscal health. The high debt servicing costs and looming refinancing risks, coupled with the substantial debt-to-GDP ratio of 124%, underscore the pressing need for proactive fiscal management and strategic debt reduction strategies. While the fixed-rate structure of much of the debt offers some protection against immediate interest rate volatility, the sheer scale of the debt remains a significant vulnerability for the Maldivian economy.
