The government has reversed its earlier contractor-financing model for the Rasmalé project and is now planning to raise US$600 million in loans to fund reclamation works at Fushidhiggaru Lagoon, according to a letter from the President’s Office to the Ministry of Finance.
A letter dated July 1 and signed by Principal Secretary to the President Mohamed Shahid instructed Finance Minister Moosa Zameer to urgently arrange an advance payment to resume stalled reclamation work. The funds are expected to come from three state-owned companies: Greater Malé Financial District Limited (US$300 million), Maldives Airports Company Limited (US$200 million), and State Trading Organisation (US$100 million).
The government has not disclosed details on the source of the loans, interest rates or repayment terms, raising concerns among analysts amid the Maldives’ worsening credit ratings.
While the country holds a ‘Caa2’ rating from Moody’s and a ‘CC’ rating from Fitch, both classified as junk, analysts warn that borrowing large sums under these ratings is likely to come with high interest rates and stringent conditions, raising the cost and risk of financing.
The Muizzu administration initially pledged that the Rasmalé project would not rely on public funds. Launched in December 2023, the project was to be financed by contractors—mainly China Machinery Engineering Corporation (CMEC)—in exchange for extended land lease agreements. However, following delays in dredging work, the government shifted its approach.
The President’s Office also authorised using the Maldives Monetary Authority’s (MMA) usable reserves or the US$400 million currency swap facility with India to make an advance payment to contractors. MMA data showed usable reserves stood at US$217.9 million at the end of May, with June figures yet to be released.
If used, this would be the first known instance of the Indian currency swap facility being tapped for such a purpose. Analysts say the facility—established under the SAARC Currency Swap Framework—is intended to provide short-term liquidity support and is not typically used for project financing. Using it for development projects would likely require renegotiation with the Reserve Bank of India.
The Rasmalé project, now managed by the Mid Free Zone Company—a joint venture of five state-owned enterprises—has made limited progress. Despite initial promises to complete dredging within eight months, only a small part of the planned 1,100 hectares has been reclaimed.