The World Bank has stated that the Maldives has made significant progress in addressing the financial challenges arising from its external debt.

The assessment was published in the World Bank's Maldives Development Update 2026, released on 11 June.

The report states that measures aimed at increasing Government revenue and reducing expenditure led to a sharp improvement in the country's fiscal position. The fiscal deficit narrowed to MVR 5.1 billion in 2025, equivalent to 4.3 per cent of Gross Domestic Product (GDP), compared with MVR 10.8 billion, or 9.9 per cent of GDP, in 2024.

Government expenditure fell to 37.1 per cent of GDP in 2025, a decline of 8.3 percentage points from the previous year, while Government revenue increased to 33 per cent of GDP, reflecting a 12.0 per cent rise compared with 2024.

The World Bank also highlighted progress in managing the country's external debt obligations, noting that the Government had successfully met key repayments, including Sukuk obligations, payments due to the State Bank of India (SBI), and liabilities under the currency swap arrangement. The report states that these measures have eliminated the immediate risk of sovereign default.

External debt servicing requirements are projected to decline to around USD 450 million in both 2027 and 2028.

The report also highlights a significant improvement in the country's external position, with the current account deficit falling from USD 1.5 billion in 2024 to USD 578 million in 2025.

Official foreign exchange reserves increased to USD 1.3 billion by the end of March 2026 following a series of Government policy measures. Although reserves declined after major external debt repayments in April, they remained at USD 717.9 million at the end of May.

The World Bank attributes the improvement in reserves to measures requiring the conversion of foreign currency earnings, reforms facilitating the collection of tax revenue in US dollars, and the currency swap arrangement secured with the Reserve Bank of India in late 2024.