President Mohamed Muizzu has directed the Finance Ministry to make an advance payment for the stalled reclamation work at Fushidhiggaru Lagoon, even if it requires tapping into the Maldives’ usable reserves or the Indian currency swap facility.

According to a letter sent by the President’s Office to Finance Minister Moosa Zameer on 1 July, Muizzu instructed that the payment be processed “as soon as possible,” either through the Maldives Monetary Authority’s (MMA) usable reserves or the US$400 million currency swap agreement with India.

The letter, signed by Principal Secretary to the President Mohamed Shahid, stressed the urgency of the advance payment to continue reclamation work under the flagship Rasmalé project. While sources familiar with the matter confirmed the letter’s authenticity, the government has yet to comment publicly.

As of end-May, MMA data showed the country’s usable reserves stood at US$217.9 million. The reserves figure for June has not yet been released.

In a related instruction, the President’s Office also asked government-owned companies to deposit forthcoming loan proceeds directly into the reserve. However, it remains unclear how much is expected, when the funds will become available, or what impact this move will have on the projects originally set to be financed through these loans. It is also not known how the government intends to manage the financing of those projects if the loan proceeds are diverted to bolster the state’s reserves.

Sources say that if used, this would be the first instance where the Indian currency swap facility is employed in this manner. However, analysts note that the swap facility—established under the SAARC Currency Swap Framework—is typically intended to provide short-term liquidity support for balance of payments and currency stabilisation purposes. It is not normally used for direct project financing or commercial transactions like advance payments to contractors.

MMA, which manages the facility, would require a separate agreement or renegotiation with the Reserve Bank of India to redirect funds for development spending. Using the currency swap for the Rasmalé project would be unusual and may not be permitted under existing terms.

The Rasmalé project, which started under the Housing Development Corporation (HDC), is now overseen by the Mid Free Zone Company, a joint venture between five state-owned enterprises. Reclamation work at Fushidhiggaru Lagoon began on 18 December 2023, with a pledge that it would not cost the state and would be completed within eight months. However, progress has been slow, and only a small portion of land has been reclaimed to date.

The broader Rasmalé development involves land reclamation across 12 sites. To date, nine sites have been awarded to Mohan Mutha Exports (MME) and China Railway Construction Corporation (CRCC), while China Harbour Engineering Company (CHEC) is handling two sites. Site D, assigned to MME, remains the largest at 264 hectares, though work there is also progressing slowly.

Initially, the Muizzu administration had planned to reclaim land through a contractor-financing model led by China Machinery Engineering Corporation (CMCC), in exchange for extended land leases, without using public funds. However, after Parliament removed MVR 400 million from the 2023 budget, the government shifted course. The state later paid MVR 77 million to CMCC to complete Site J, and the project is now reportedly funded through an undisclosed loan secured by HDC.

Officials have not confirmed the total loan amount, but Construction Minister Abdulla Muththalib previously estimated the cost of reclaiming 1,100 hectares of land to range between US$500 million and US$700 million.