Loan to Refinance The Sukuk Expiring Will Not Exceed 9%, President Reveals

President Mohamed Dr Muizzu said on today that any loan taken by the government to refinance the USD 500 million sukuk maturing this year will carry an interest rate of no more than nine per cent, assuring parliament that the administration will avoid high-cost borrowing and pursue a more sustainable approach to managing public debt.

USD 500m Sukuk Matures in April

In his presidential statement to parliament, Dr Muizzu said the sukuk, the government’s largest single debt obligation due this year, will mature in April. Of the total amount, USD 150 million is planned to be paid using foreign currency deposits held in the Sovereign Development Fund (SDF).

The remaining USD 350 million will be refinanced or paid off through additional borrowing, he said.

Borrowing Costs Capped at Nine Per cent

The president said the government would not follow what he described as the “irresponsible” borrowing practices of previous administrations.

“I can assure the people and members of parliament that the interest rate on any debt borrowed by the government will not exceed nine per cent,” he said.

His comments come amid reports that the government has been in discussions over a potential loan from Cargill Financials at an interest rate of around 15 per cent. The president did not directly address the reports but said the administration would not agree to borrowing on terms that place an excessive burden on public finances.

Sovereign Development Fund Boosted

President Muizzu told parliament that the SDF held just USD 2 million in foreign currency at the end of the previous government’s term. He said the current administration has since deposited additional foreign exchange into the fund, increasing available foreign currency to USD 275 million.

He said strengthening the SDF was part of broader preparations to meet the sukuk repayment.

Reserves Rise to Record Level

The president said the government has taken steps to improve the management and inflow of foreign currency since taking office, including measures related to the handling of dollar receipts.

As a result, USD 492 million had been deposited with the Maldives Monetary Authority as of December last year, he said. Official reserves have since risen to a record USD 1.3 billion, according to the president.

Additional Funds Secured

Dr Muizzu said that, in addition to tax revenue, the budget has secured USD 100 million, which is expected to be collected within the next 45 days. He added that a further USD 150 million is being raised from abroad.

“This government has been working to reduce the heavy debt burden inherited from previous governments and to provide a prosperous future,” he said.

He said the government will increase deposits in the Sovereign Development Fund to a level that would allow future debt repayments to be made without taking on new loans.