The Ministry of Finance and Public Enterprises has said the Maldives’ final $50 million repayment on a Treasury bill facility subscribed by the State Bank of India (SBI) was funded through money accumulated in the Sovereign Development Fund (SDF), rejecting claims that deposits held at Bank of Maldives (BML) were used for the payment.
The clarification follows speculation over how the government financed the $50 million obligation, which matured on September 17.
According to the Finance Ministry, claims that public deposits held at BML were used to settle the debt are baseless. The ministry said funds required for the repayment had instead been accumulated in the SDF as part of advance preparations for upcoming external debt obligations.
The payment cleared the final portion of a $150 million Treasury bill facility obtained through SBI in 2019 during former President Ibrahim Mohamed Solih’s administration.
The facility had been obtained as budget support and was subsequently repaid in three $50 million tranches.
The current administration settled the first $50 million in January 2024. A second $50 million payment was made on May 11 this year, leaving a final $50 million obligation due on September 17.
With that payment now completed, the entire $150 million facility has been settled.
President Dr Mohamed Muizzu had previously said the government was preparing in advance to meet its major external debt obligations rather than seeking last-minute arrangements as maturity dates approached.
During a press conference at the President’s Office on May 11, the President confirmed the repayment of the second $50 million portion and said the remaining $50 million due in September would also be settled.
At the time, the President said the administration had paid $974 million in inherited debt obligations, including $524 million related to sukuk repayments and $400 million from a currency swap obligation.
The SDF has become a central component of the government’s strategy for managing the Maldives’ substantial external debt repayments.
The fund was established to build resources for sovereign debt servicing and reduce the risks associated with large external obligations falling due within short periods. The government has increasingly directed foreign currency into the fund as it prepares for major repayments.
Earlier this year, President Muizzu told Parliament that the SDF held more than $275 million, compared with what he described as a usable balance of around $2 million when his administration assumed office.
The Finance Ministry said its debt management strategy involves regularly accumulating funds in the SDF and arranging financing well ahead of maturity dates.
The latest $50 million payment comes amid continued public attention on the country’s foreign exchange position and the government’s ability to meet external debt obligations while maintaining sufficient dollars for essential imports.
Official reserves stood at approximately $644 million at the end of August, according to figures cited by the Finance Ministry following the SBI repayment.
The ministry sought to reassure the public that settling the SBI obligation would not disrupt the availability of foreign currency required for essential imports, including food, fuel and medical supplies.
It said arrangements remain in place to maintain those imports despite the significant foreign currency outflow associated with debt repayments.
The government is also holding discussions with international financial institutions and bilateral partners as part of efforts to strengthen the country’s foreign exchange reserves and manage upcoming financing requirements.
With the September payment completed, the $150 million SBI facility taken in 2019 has now been fully cleared, while the government continues to build the SDF as a buffer for upcoming sovereign debt obligations.
