Deposits into the Sovereign Development Fund (SDF) rose by 50.3 per cent in the first half of 2025, reflecting the Government’s renewed focus on strengthening the country’s fiscal buffers and improving its ability to meet external debt obligations.

According to the Ministry of Finance and Planning’s Weekly Fiscal Development report, MVR 1.10 billion was deposited into the SDF from 1 January to 17 July 2025. This compares to MVR 728.7 million during the same period last year, indicating a substantial increase in contributions to the fund.

Set up in 2017, the SDF was designed to serve as a fiscal reserve to support sovereign debt repayment during periods of financial stress, maintain credit ratings, and promote long-term savings and intergenerational equity.

Although total deposits have increased, the composition of the fund has also undergone a notable shift. When President Dr Mohamed Muizzu assumed office, only 35 per cent of the SDF’s holdings were in US dollars. An audit report released by the Auditor General’s Office earlier this year revealed that in 2020 and 2021, all dollar deposits in the fund had been converted to local currency. The report further noted that while 94 per cent of the fund was held in dollars at the end of 2018, that figure fell sharply to 30 per cent in 2019 and declined further to 15 per cent by 2021.

Since then, the Administration has prioritised increasing the proportion of foreign currency in the SDF to improve the country’s ability to meet upcoming external debt repayments in 2025 and 2026.

Credit rating agencies have taken note of the improvements. Both Moody’s and Fitch have opted not to downgrade the Maldives' sovereign credit rating further, citing the strengthened SDF as a contributing factor.

Moody’s Ratings has maintained the Maldives’ long-term issuer rating at Caa2, citing cautious optimism in the country’s economic recovery despite ongoing fiscal and external vulnerabilities. The agency also noted that the Maldives’ foreign exchange reserves have been steadily increasing since October 2024, aided by policy reforms, increased support from external financial institutions, and targeted strategies to boost foreign currency revenue.