Bank of Maldives denies funding government debt repayment to India

The Bank of Maldives (BML) has issued a clarification denying claims that it provided liquidity for the government’s final US$50 million repayment of a US$150 million Treasury Bill facility to the State Bank of India. BML stated that the repayment, completed on September 17, 2026, was funded by the Sovereign Development Fund (SDF) and did not utilize customer deposits or the bank's own resources.

The Maldives is currently facing a severe foreign-exchange crisis characterized by a shortage of US dollars. This shortage is driven by a heavy external debt burden, with US$1.7 billion in debt service due in 2026. While the administration of President Mohamed Muizzu has prioritized debt repayments to avoid sovereign default, these payments—including a US$400 million currency swap with India—have significantly depleted foreign currency reserves.

Currently, the nation's reserves cover approximately one and a half months of imports, falling below the three-month buffer recommended by the IMF. This shortage has caused delays for businesses attempting to pay overseas suppliers and has increased reliance on parallel currency markets.