The Government repaid USD 2.3 billion in foreign debt during the first two and a half years of the current Administration while reducing the 2025 budget deficit to its lowest level in six years. 

Statistics released by the Ministry of Finance and Public Enterprises show that between November 2023 and March 2026, a total of USD 2.3 billion was paid towards foreign debt obligations, including USD 1.7 billion in principal repayments and USD 657.9 million in interest. The ministry noted that this was significantly higher than the amount spent on foreign debt repayments during the initial years of the previous two administrations, with USD 423 million repaid during the first years of former President Abdulla Yameen Abdul Gayoom's administration and USD 538 million during the first years of former President Ibrahim Mohamed Solih's administration.

The ministry stated that the Government's 2025 fiscal performance enabled it to meet debt obligations while reducing the budget deficit, increasing revenue and completing the year without seeking a supplementary budget. Revenue and grants reached MVR 39.9 billion by the end of 2025, exceeding the projected MVR 39.8 billion and marking the highest annual revenue collected by the State between 2019 and 2025. The increase was driven by higher tax and non-tax revenue, including tourism-related income, work permit fees, resort lease extension fees, land sales and transfer fees.

The ministry said tourism revenue remained in line with expectations, supported by the arrival of more than 2.24 million tourists during the year and higher-than-projected tourist bednights. As a result, revenue from Tourism Goods and Services Tax (TGST) and Green Tax contributed positively to State income.

Government expenditure in 2025 totalled MVR 44.2 billion, compared with an approved budget of MVR 49.2 billion, resulting in savings of MVR 5 billion. The ministry attributed the reduction to stricter expenditure controls, changes to the implementation of State investment projects and measures aimed at managing both recurrent and capital expenditure more efficiently. It said public services, social protection programmes and subsidy schemes were maintained despite the reduction in spending.

The budget deficit was reduced from a projected MVR 9.4 billion to MVR 4.4 billion by the end of the year, equivalent to 3.6 per cent of GDP and the lowest deficit recorded in six years. The ministry also noted that 2025 was the only year in the past five years in which State expenditure was managed without a supplementary budget. A total of MVR 10.1 billion was spent on debt repayments during the year.

By the end of 2025, total State debt stood at MVR 154.9 billion, equivalent to 129.8 per cent of GDP. The ministry said fiscal reforms implemented during the year focused on debt consolidation and strengthening foreign currency reserves, while ensuring uninterrupted public services and subsidies despite what it described as a substantial debt burden inherited from previous administrations.

Budget deficit falls to six-year low as debt repayments reach USD 2.3 billion