Sovereign Development Fund to Cover $150M Sukuk Payment as President Muizzu Unveils Lower-Cost Debt Strategy

President Dr. Mohamed Muizzu has announced that the Maldives will settle a $150 million Sukuk payment due in April 2026 using foreign currency reserves accumulated in the Sovereign Development Fund (SDF), while simultaneously pursuing a broader refinancing strategy aimed at reducing borrowing costs and strengthening long-term debt sustainability. The announcement was made during his Presidential Address at the opening of the People’s Majlis for 2026 on Thursday, 5 February.

Addressing lawmakers, President Muizzu said the SDF, originally established to meet external debt obligations, has been rebuilt into a robust financial buffer capable of supporting immediate debt repayments. He revealed that when his administration took office on 17 November 2023, the fund held only $2 million, but has since been significantly strengthened through dollar-retention policies and targeted fiscal reforms. According to the President, these improvements have also gained recognition from international credit rating agencies, reflecting growing confidence in the country’s fiscal management.

The President explained that the government’s medium-term budget strategy relies on the SDF to manage debt repayments while reducing reliance on new borrowing. He emphasized that maintaining adequate foreign currency liquidity within the fund is central to ensuring that the Maldives can meet its financial obligations without placing additional pressure on public finances or increasing national debt levels.

In outlining the broader debt strategy, President Muizzu also detailed plans to address the $500 million Sukuk maturing in April, noting that part of the liability will be settled while the remainder will be refinanced under more favorable terms. He reminded Parliament that the Sukuk was issued by the previous administration to repay a $250 million bond from 2017 and carried an interest rate of 10.5 percent, one of the most significant financial burdens inherited by the current government.

President Muizzu stated that his administration has been preparing for this repayment since taking office by restoring the SDF as a foreign currency-denominated fund. He noted that the fund now holds more U.S. dollars than initially projected in the 2026 national budget for Sukuk settlement, strengthening the government’s financial position ahead of the maturity deadline.

Looking ahead, the President assured that any refinancing of the remaining Sukuk balance will be secured at lower rates, with the government committed to keeping interest on state debt below 9 percent. He said the overarching objective is to ease the country’s debt burden, enhance fiscal resilience, and secure more sustainable financing conditions for the Maldives’ future economic stability.