Maldives plans $175m sukuk sale to ease foreign debt repayment

The Maldivian government has included the sale of a new bond or sukuk worth 175 million dollars to the international market in next year's budget, despite not having raised such funds in the past two years or this year. The move is intended to make it easier to repay foreign debt next year. Although the budget figures indicate that a sukuk will be sold, no details regarding the matter have been clarified, and it was not mentioned in the budget statement presented by Finance Minister Hassan Zareer to the Parliament. According to the budget plan, the government intends to sell bonds or sukuk for the next three years as well, aiming to raise 200 million dollars (3 billion rufiyaa) in 2028 and 250 million dollars (3.8 billion rufiyaa) in 2029. The total amount to be raised within the next three years will reach 675 million dollars. The government had also planned to raise 450 million dollars (6.9 billion rufiyaa) from the foreign market in this year's budget, but this plan failed, as it did in previous years. This necessitated taking a large amount from the Sovereign Development Fund (SDF) to pay the sukuk in April of this year. The principal and profit of the sukuk, totaling 524.7 million dollars, were paid by taking 350 million dollars from the SDF, with the remaining 175 million dollars settled using the state's official reserves. Due to this payment, the official reserves dropped from 1.3 billion dollars to 718 million dollars, and usable reserves fell to 148 million dollars. Nevertheless, the path to take further debt has been cleared, as paying the sukuk improves the country's rating. Economic experts had previously stated that the reason bonds could not enter the market according to the government's plan was due to the low rating. However, since the country's ratings remain at "junk" level, it would not be easy to raise debt without high interest. In next year's budget, including the funds to be raised from the bond market, a total of 6.9 billion rufiyaa from abroad has been included to be raised. It has also been decided to deposit 2.36 billion rufiyaa into the SDF next year, with the same amount set to be withdrawn from the fund.