Deposits into the Sovereign Development Fund (SDF) have grown by 37 per cent so far this year, according to the Ministry of Finance.

As of May 8, the fund had received MVR 681.9 million in deposits, all made in US dollars, the Ministry’s weekly reports show. That compares to MVR 497.3 million during the same period last year – a 37 per cent increase.

The SDF was established in 2017 to manage state debt repayments. When the government changed in 2018, the fund held around USD 120 million. However, a 2021 International Monetary Fund (IMF) report noted that in 2020, 90 per cent of the fund’s money was converted into Maldivian Rufiyaa.

As a result, and with fewer dollar deposits in the following years, the fund’s balance had dropped to just USD 2 million when President Dr Mohamed Muizzu took office on November 17, 2023.

Speaking at a press briefing on May 3, President Dr Muizzu revealed that USD 121 million has been deposited into the SDF since the start of his Administration, up to April 30, 2025.

Credit rating agency Fitch cited the SDF’s strong dollar reserves as a key reason it chose not to downgrade the Maldives’ credit rating last year, recognising the fund’s role in meeting short-term financial obligations.

The SDF operates as a fiscal reserve separate from the state’s official reserves. Its purpose is to repay debt using the Government’s foreign currency earnings, preventing further strain on official reserves.

International financial institutions warn that keeping the fund healthy is vital, as the Maldives faces around USD 1 billion in debt repayments next year. A strong SDF will help ease pressure on both the Government and official reserves.