Domestic Debt Increased More Than MVR 11 Billion Over Past Year

The Mohamed Muizzu administration has borrowed more than MVR 11 billion from the domestic market to cover its expenditure over the past year, according to Ministry of Finance data.

Comparing the data across the weekly fiscal development reports released by the Ministry, the total amount of treasury bills (T-bills) and bonds sold in the domestic and foreign markets as of 20 November 2023 stood at MVR 77.3 billion. However, the figure as of 18 November 2024, had risen to MVR 88.8 billion.

During this period, 99 percent of the increase in debt came from the domestic market — amounting to MVR 11.4 billion.

The biggest increase came in the form of Maldivian Rufiyaa (MVR)-designated T-bills and bonds sold. T-bill debt increased by MVR 3.8 billion, while bond debt increased by MVR 3.6 billion. In addition, Islamic instruments have drawn more than a billion MVR from the domestic market.

US Dollar (USD) T-bills and bonds sold added MVR 2.9 billion (US$189 million) to the debt over the year. Most of the USD financing raised was borrowed through commercial banks with repayment periods of between five and 10 years.

The amount of securities sold in the foreign market did not change significantly during the past year. Debt to be repaid in the form of bonds and securities sold in the foreign market increased by MVR 12 million over the past year — with MVR 1.5 billion in bonds and MVR 7.6 billion as sukuk coming due.

The increased borrowing from the domestic market is a matter of marked concern to the Maldives Monetary Authority (MMA) and the Auditor General’s Office, with both agencies highlighting the state’s increased exposure with commercial banks as they continue to borrow from the domestic market.

The increased exposure, in turn, reduces the amount of funds available to lend to businesses, exacerbating potential negative impacts on the economy.

Notably, domestic borrowing is now higher than the amount specified in the National Budget 2024. According to the borrowing plan released by the Ministry, the administration had planned to raise MVR 3.9 billion from the domestic market this year.