The Maldives is facing a strained economic situation, with international credit rating agencies highlighting ongoing challenges. The West Asia conflict has further complicated matters.
The Maldives has again sought an extension of the Currency Swap facility. However, sources told ET that while the request is under consideration, extant rules-such as the requirement of a cooling-off period between drawals and limits on roll-overs-make it difficult to accede.
If India is unable to meet the request, it could worsen the Maldives’ financial challenges in the short to medium term, according to people familiar with the matter.
India has, in recent years, played a proactive role in providing short-term financial support to the Maldives to ease liquidity pressures. This includes a $400 million Currency Swap facility in October 2024, rolled over twice despite stringent rules, and the rollover of two interest-free $50 million Treasury Bills in May and September 2025 for an additional year-steps described as exceptional gestures for a close neighbour.
A $565 million Line of Credit for priority infrastructure, along with agreements to reduce annual debt servicing obligations, was announced during Prime Minister Narendra Modi’s visit to Male in July 2025.
In 2024, Fitch Ratings downgraded the Maldives’ sovereign rating to CC, citing heightened default risks and structural vulnerabilities, including high external debt and fiscal pressures. In 2025, Fitch retained the CC rating, indicating a default event remains probable within the rating horizon. Moody’s also maintained its CAA2 rating in 2025, signalling continued credit stress.In 2026, the financial situation remains fragile, with major debt repayments of around $1 billion in April, including a $500 million Sukuk bond and a $400 million Currency Swap with India.
On April 1, 2026, the Maldivian government announced repayment of the $500 million Sukuk bond along with $24.68 million in interest from its forex reserves and Sovereign Development Fund, significantly reducing reserves, according to people familiar with the economy.
The West Asia conflict has also impacted the Maldives’ economy, with tourist inflows declining and energy costs rising. Its ability to raise fresh loans may also be affected.
