The World Bank has commended the Maldives government’s robust measures to reduce national debt and rebuild fiscal reserves in its latest economic assessment. According to the “Maldives Development Update 2026” report, the administration’s expenditure-cutting policies have yielded significant results, effectively stabilizing the country’s financial outlook.

Key findings in the report highlight that the budget deficit, which stood at MVR 10.8 billion in 2024, was successfully reduced to MVR 5.1 billion by 2025. This marks a substantial fiscal improvement, with the deficit-to-GDP ratio falling from 9.9 percent to 4.3 percent. Furthermore, state revenue increased by 12 percent (representing 33 percent of GDP), while overall expenditures were curtailed by 8.3 percent compared to 2024 levels.

The World Bank noted that the immediate risk of national bankruptcy has been averted. The report confirmed the government’s consistency in meeting its international financial obligations, including payments for currency swaps, Sukuks, and dues to the State Bank of India (SBI). Projections also suggest that the debt-servicing burden for 2027 and 2028 will decrease to approximately USD 450 million.

Regarding the current account deficit, the figure narrowed from USD 1.5 billion in 2024 to USD 578 million in 2025. Official reserves also showed resilience; while reserves reached USD 1.3 billion by March 2026, they remained at a healthy USD 717.9 million by the end of May, even after significant debt settlements in April.

The report attributes this fiscal strengthening to the introduction of new foreign exchange regulations, beneficial changes to dollar-denominated tax collection, and the currency swap facility established with the Reserve Bank of India in late 2024. These sentiments echo recent praise from the International Monetary Fund (IMF), which also recognized the Maldives’ commitment to fiscal sustainability.