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Publisher’s
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Welcome to the June 2025 edition of Corporate Maldives Magazine. This quarter’s Corporate Maldives Spotlight features First National — a company making quiet but serious changes to the financial sector since its launch in 2021.
Led by Hassan Ziyath, the firm is helping local businesses access capital in smarter ways, pushing for better financial literacy, and investing in the tools needed to grow a stronger capital market. We sat down with Ziyath to talk about the company’s journey so far and what comes next.
In the rest of the magazine, we look at the bigger picture — how the Maldivian economy is growing, but not evenly. Tourism is still doing the heavy lifting, while construction, fisheries, and other sectors continue to face challenges. Our coverage also explores rising costs, public debt, and how digital finance is changing the way we bank and do business.
You’ll also find stories on climate funding, workforce burnout, pension reform, and what the future could look like if artificial intelligence outpaces human decision-making. It’s a packed issue, and it reflects the moment we’re in — one of pressure, change, and the need to think ahead. Thanks for reading.
08
CORPORATE MALDIVES SPOTLIGHT: FIRST NATIONAL
30
GOVERNMENT & ECONOMY
52
TOURISM & AVIATION
56
TRANSPORT & CONSTRUCTION
62
ENVIRONMENT & CLIMATE CHANGE
68
HUMAN RESOURCES
BANKING & FINANCE
80 94
TECHNOLOGY & INNOVATION
FOREIGN POLICY
84 96
TRADE, FUEL & SHIPPING
CORPORATE MALDIVES SPOTLIGHT
First National
At the helm of First National, Hassan Ziyath is helping shape a more agile, investment-ready financial landscape in the Maldives. Since the founding of the company in 2021, he has led its evolution into a dynamic player offering structured financing solutions, corporate advisory services, and capital market access tailored to the local context.
Ziyath’s career spans decades of experience in public finance and capital markets, culminating in a vision to bridge global financial instruments with homegrown opportunity. Under his leadership, First National aims to reimagine how Maldivian businesses access growth capital, with an emphasis on financial literacy, transparency, and long-term value creation.
As the country looks to deepen its private sector capabilities, Ziyath sees First National as more than a financier, it’s a platform for transformation. We sat down with him to discuss the company’s origin story, its goals for the coming years, and how it plans to unlock capital for Maldivian enterprise.
HassanZiyath
CEO, FIRST NATIONAL
You have an extensive background in finance and auditing. What inspired you to co-found First National at this point in your career?
Looking back at when First National was founded in 2021, what was the gap in the financial services landscape that you and your team sought to address?
How has your experience as Auditor General shaped the way you approach running a private sector financial institution today?
First National embodies a vision of like-minded individuals with collective experience of over 30 years in accounting, finance and investment management and we all have been working together in different capacities. As I concluded almost 7 years of my position as the Auditor General, it was the right point in time for me to take on the new challenge of establishing a corporation to contribute to the financial sector development of the Maldives, especially the Capital Markets together with the other three co-founders of First National.
Our thinking is that the Capital Markets can be developed further making it easier for businesses to raise capital and at the sametime provide incentives to save for the future. We see lots of opportunities in product development as well as capital markets infrastructure development in this space.
Rather than trying to fill a gap in the financial services landscape, we wanted to contribute to the development of the capital markets. The development of the capital markets are essential for allocating capital to most effective use and at the right price. Currently, the financial system is very much monopolistic in nature and therefore, not efficient. For example, the market rates/prices do not necessarily represent the risk and return profile of the borrower or the project for which finance is sought.
We believe that corporations with good business cases, adequate operating history, financial strength and strong governance should be able to obtain finance at rates appropriate for their risk profile. This can only be made possible through the capital markets. We also saw the opportunities in the transition of the first generation of business to the second generation as well as in the growing professional class in the Maldives. In addition to corporate finance, we saw opportunities in wealth management as well professional asset management. While we focus on developing our product portfolio, we dedicate lots of time in building talent at First National.
I believe it’s all about the soft skills that matter to become effective in leading an organisation. Being in the state sector and leading a venerable institution of the state have given me the opportunity to manage diverse teams and build networks. First National being a financial services firm has its own internal complexities to manage as well as external complexities; building trust with the public, the business community as well as working hand-in-hand with the policy and regulatory institutions. Even though the private sector entities operate in a commercial setting, applying and adopting the experiences from the state sector, especially managing people, are essential to run a commercially oriented entity.
First National’s vision includes integrating the Maldivian economy into the global financial system. What are the biggest challenges standing in the way of that goal?
Capital markets are still relatively young in the Maldives. What would you say is misunderstood about this space among the local business community?
Let me make a point on this first, the Maldives is promoted overseas as a holiday destination and we have been very successful in this. We have not been able to capitalize on the destination effect in attracting investment to the Country successfully. However, we believe the Maldives is a great place to invest as well. As a developing economy, the returns on investment in Maldives are very attractive and we dont believe that there is above average risk in investing in Maldives too. The ground reality is far better than the noise.
While I am very optimistic, I would like to make a note also that there are numerous challenges in integrating Maldives economy to the global financial system, which include the regulatory obstacles, infrastructure issues, lack of awareness on the working of the international financial markets. We are working to address these challenges through dialogue with policy and regulatory bodies, reaching out to the players in the international financial system, producing our own research so that it becomes easier for our business to tap into international financial markets in raising finance. If our story is told clearly and when we continuously engage the policy and regulatory institutions as well as international financial market entities, I believe a number of local businesses can take advantage of the international financial markets. We need to think global even in finance.
The capital markets remained inactive although it has been sometimes since the securities act came into force. The inactivity is mainly due to lack of private sector entities acting as market makers. Our financial system is a bank-based system and the issuance of securities to raise finance is a new idea for most local businesses. Issuance of securities is also a more complex form of finance raising process than seeking a bank loan. The misunderstanding is mainly due to lack of awareness simply because there aren’t enough local firms promoting the capital markets.
We entered this market with a very clear understanding of the challenges and we reached out to the potential clients. We are very much humbled by the trust placed in us by very reputable business in the Maldives and took the lead in the development of the capital markets, especially the corporate bond markets, and opened a whole new market for businesses to raise finance.
You’ve witnessed firsthand the economic and political evolution of the Maldives. In your view, what is the most overlooked lesson from that transformation?
You’ve worked in both the public and private sectors. Where do you believe real change happens faster, within institutions or through entrepreneurship?
I will focus on the financial markets to answer this question. We believe that we have a challenging public finance issue. I think the best lesson we should learn is that we should let the market forces allocate capital and that less government intervention in markets would result in better outcomes in the long-run. If we have efficient financial markets, I believe it’s not only the private sector that would benefit in raising finance, but also the government sector as well. We could have brought a lot of allocative efficiency and reduced wasteful spending if government’s had resorted to market based financing to meet the deficits
This is an interesting question. In my view, for real change to happen it requires two things; a clear vision and unwavering commitment to endure the pain of the process of change. It’s not a function of institutions or entrepreneurship. As leaders, one should acknowledge that change won’t be easy and that it requires tough skin to endure the tiring journey of making changes to and solidifying the changes within institutions or organisations.
If you had to summarise the next chapter for First National in just three words, what would they be?
Although our DNA is in finance, we are here to serve people, families and business in their journey to become successful and prosperous. To answer your question let me summarise our next chapter as follows; Inclusion, integration and shared prosperity
Leading with Innovation:
First National’s Mission to Build a Digital Financial
Ecosystem
It is not often that a new financial firm reshapes an entire segment of the market in just a few years. But since its founding in 2021, First National has steadily positioned itself as a transformative force within the Maldivian financial services sector, choosing innovation over convention and precision over legacy.
Untethered by inherited systems or institutional inertia, First National has built its foundations differently. Its core infrastructure reflects a digital-first approach, deliberately designed for flexibility, responsiveness and long-term scalability. At its centre is a modern microservice architecture, allowing the company to adapt rapidly, integrate efficiently and respond to client needs as they evolve in real time.
This system is not just technical scaffolding. It is a deliberate choice to prioritise resilience and transparency. The firm’s back-end environment is built around event-driven systems with auditability at its core. Real-time monitoring, secure user authentication and rigorous data integrity protocols ensure compliance.
Nowhere is this more evident than in the firm’s brokerage operations. First National’s digital trading platform, tailored for the Maldives Stock Exchange, has become a central artery for market activity. In 2024, the firm facilitated over 90 percent of all trades on the exchange, executing 708 transactions that year alone. That momentum has not only continued into 2025 but accelerated, with nearly 330 trades already recorded in the first quarter.
More significantly, the platform has introduced a cultural shift in the way Maldivians interact with securities. Younger investors, historically underserved in this space, now account for a growing share of activity. The ease of access, enabled by seamless client onboarding and digitised KYC procedures, has reduced friction at every step. Clients can open accounts, monitor holdings and initiate trades with minimal delay, all through an interface designed to prioritise clarity and control.
It will be a restructured financial landscape where trust is embedded, settlement is instantaneous and transparency is non-negotiable —
But First National’s ambitions are not limited to product design or transaction volumes. At theheart of its long-term strategy lies a more systemic project: the development of Financial Market Infrastructure (FMI) across the country. The firm is working to build a digital ecosystem that goes beyond private operations and touches the wider structural needs of the market itself.
The Maldivian financial sector, for all its recent growth, still lacks access to modern FMI systems. First National is addressing that directly. With an eye toward global standards and future-proof architecture, it is investing in the design of exchanges, payment systems, dematerialised securities depositories, securities settlement systems and trade repositories. These efforts are underpinned by advanced encryption technologies, AI capabilities and real-time data systems.
The firm’s FMI strategy is deliberately broad. In-house R&D is paired with strategic partnerships, regulatory engagement and collaboration with service providers already in the ecosystem. This approach reflects a recognition that digital transformation, particularly in financial markets, requires not only the right technology but the right alliances and frameworks to succeed.
If successful, the result will not simply be a more efficient trading environment. It will be a restructured financial landscape where trust is embedded, settlement is instantaneous and transparency is non-negotiable. In this vision, the Maldives is not just a participant in the global market. It is a regional player, drawing in capital, attracting investor confidence and offeringliquidity in ways previously unimaginable.
What First National is building is not a replica of existing financial systems. It is, in many respects, an attempt to rewrite them entirely, on new terms and with new tools. The market is watching, and trading, accordingly.
First National Bets on a Capital Market Future
For much of its modern history, the Maldivian business landscape has been shaped by the rhythms of international trade. Merchant routes and maritime exchange once defined the structure of enterprise here. What began as family-run operations, often closely guarded and handed down across generations, gradually matured into more diversified ventures supported by external expertise. Yet, even as businesses scaled and markets shifted, a persistent challenge has remained: the limited depth of the domestic capital base. Today, that may be about to change.
At First National, the conviction is clear. The Maldivian financial sector is on the cusp of a structural shift, and the moment calls for more than incremental reform. It requires a new financial architecture that supports both the ambition of local entrepreneurs and the appetite of global investors.
The region-wide trend is compelling. As of 2024, investor interest in alternative assets hasgained steady traction across the AsiaPacific, with capital increasingly seeking out emerging markets that offer untapped potential and favourable risk-return profiles. This growing pool of capital could offer countries like the Maldives a chance to loosen their dependence on traditional, narrowly defined financial channels.
First National is positioning itself at the intersection of this opportunity. The firm sees a unique alignment between the evolving demands of Maldivian businesses and the availability of regional capital. What was once a commercial environment driven by legacy management practices is now giving way to a generation of entrepreneurs, both first and second, who are more financially literate, more investment-savvy and more inclined to explore market-based financing strategies.
These shifts have led to a marked increase in demand for instruments that go beyond conventional bank lending. Entrepreneurs are looking for flexible, scalable solutions that can support long-term growth. And capital markets, long underutilised in the Maldivian context, are beginning to emerge as a viable pathway.
First National is working to close the distance between global capital and domestic opportunity. By investing in infrastructure that supports transparent, scalable investment models, the firm aims to strengthen the core of the capital market. At the same time, its broader mission includes preparing local businesses for investment readiness, aligning internal governance and strategy with the expectations of institutional investors.
This twin-track strategy, building infrastructure while cultivating demand, reflects a nuanced understanding of what it means to
create a functioning capital market. It is not just about regulatory frameworks or listings. It is about ensuring that the businesses seeking capital are prepared to receive it and that the investors providing capital are confident in the structures that underpin the market.
The backdrop to all of this is a country in transition. As the Maldivian economy diversifies and the private sector matures, access to alternative sources of financing will become not just beneficial but essential. First National’s long-term focus is to support this transition by enabling a more resilient, transparent and investor-ready financial ecosystem.
In doing so, the firm is contributing to a broader vision. A future in which the Maldives is not only a destination for tourism but a hub for capital. A place where trust, opportunity and innovation converge to drive sustainable growth.
Tourist ArrivalsMonthly Tourist Arrivals -
Share of Bed Capacity by Type
Tourist arrivals to the Maldives have continued their upward momentum into 2025, with the Ministry of Tourism reporting 979,958 visitors by 4 June, reflecting strong performance across key markets. This marks a significant increase compared to the same period in 2024, reaffirming the Maldives’ position as a leading global travel destination.
In May 2025, the Maldives welcomed 135,614 tourists, a 13.1% rise compared to 119,873 arrivals in May 2024. This steady growth aligns with the government’s ambition to exceed the historic milestone of two million visitors recorded last year.
China continues to lead as the top source market in 2025, contributing 117,874 arrivals, or 12% of the total. Russia and the United Kingdom follow with 107,518 and 99,671 arrivals, respectively. Notably, Italy overtook Germany to claim fourth place with 82,240 visitors, while Germany recorded 74,590 arrivals.
Accommodation preferences show that resorts remain dominant, attracting nearly 69% of all tourists. Guesthouses continue to gain popularity, drawing approximately 225,539 visitors—around 23% of total arrivals. Hotels accounted for 2.9%, with safari vessels filling the remaining share.
As of early June, 1,200 tourism establishments are in operation across the country, offering a bed capacity of 64,106. Resorts comprise the largest share of this capacity, followed by guesthouses and other accommodation types.
With daily arrivals averaging 4,375 in May and peak traffic hitting 7,349 tourists on 1 May, the Maldives’ tourism sector shows no signs of slowing. The steady influx of travellers, particularly from Asia and Europe, underscores strong international demand. As flight connectivity improves and new promotional campaigns roll out across key markets, industry stakeholders remain optimistic that 2025 will not only meet but potentially surpass last year’s record-breaking figures.
Maldives
Financial Position - April 2025
Total Assets
Foreign Currency Finacial Assets
Local Currency Finacial Assets
Total Liabilities
Foreign Currency Financial Liabilities
Local Currency Financial Liabilities
Overall, the Maldives Monetary Authority saw continued asset growth in April 2025, underpinned by strengthened foreign reserves and improved equity. While liabilities also increased— especially in the local currency segment—the figures reflect overall financial stability and resilience.
Inflation - 2024
Inflation in the Maldives has shown a gradual upward trend over recent months. In October 2024, the inflation rate stood at 1.1%, rising to 4.1% in November and 4.8% in December. The trend continued into 2025, with January recording 5.3%, followed by 5.1% in February, 5.3% in March, and 5.6% in April. This steady increase highlights growing price pressures in the economy across multiple sectors. Inflation is the percentage change in the
Import & Export 2024/25
Value in Millions - USD
Imports and exports in the Maldives showed notable volatility from late 2024 into early 2025. Imports totalled MVR 330.49 million in October before dipping significantly to MVR 260.10 million in November. This was followed by a sharp rise to MVR 375.79 million in December, marking the highest monthly import value during the period. January saw a decline to MVR 334.46 million, with figures continuing to fall through February and March—MVR 284.71 million and MVR 285.29 million respectively—before modestly recovering to MVR 304.54 million in April.
Exports followed a more stable upward trend, beginning at MVR 24.98 million in October and increasing to MVR 34.34 million in November. December saw further growth to MVR 39.38 million, peaking at MVR 55.75 million in January. Although there was a slight decline in the following months, exports remained steady— MVR 43.94 million in February, MVR 42.58 million in March, and MVR 42.57 million in April. The sustained export performance reflects improved external demand, while fluctuations in imports suggest shifting domestic consumption and potential delays in procurement cycles.
MIRA - Revenue Collection
October 2024 to January 2025
Government revenue in the Maldives continued to grow in the first quarter of 2025, largely supported by the strong performance of the tourism sector.
However, by March, signs of volatility began to surface. According to the Maldives Inland Revenue Authority (MIRA), total revenue collection reached MVR 3.34 billion in January, dipped to MVR 2.54 billion in February, rebounded to MVR 3.41 billion in March, and then declined again to MVR 2.59 billion in April.
Tourism Goods and Services Tax (GST) remained the dominant revenue source, consistently contributing over MVR 1 billion each month. January brought in MVR 1.06 billion, followed by MVR 920 million in February, a sharp rise to MVR 1.44 billion in March, and MVR 1.16 billion in April. This consistent strength reinforces the tourism sector’s critical role in underpinning the state’s fiscal position.
Other tax categories, however, showed marked instability. Corporate Income Tax peaked at MVR 842 million in January before falling to MVR 272 million in February, and then plunging to MVR 45.7 million and MVR 25.7 million in March and April, respectively. Bank Profit Tax followed a similar trajectory, contributing MVR 153 million in January, just MVR 6.8 million in February, and then disappearing entirely in March and April—likely due to the timing of tax submissions and seasonal factors.
Non-resident Withholding Tax also fluctuated, with MVR 139 million collected in January, dropping to MVR 80 million in February, before climbing to MVR 111 million in March and MVR 112 million in April. Expatriate quota fee revenue steadily declined from MVR 36 million in January to MVR 21.8 million in March, though April saw a modest recovery to MVR 27 million.
Meanwhile, Green Tax revenue showed a notable rise, increasing from MVR 108 million in January to MVR 270 million in March, before slightly easing to MVR 227 million in April. Revenue from lease period extension fees spiked at MVR 307 million in February but declined to MVR 162 million in March.
Although overall revenue collection has remained robust, the latest data underscores the Maldives’ continued fiscal reliance on the tourism industry and highlights the lack of diversification across revenue streams. The evident monthly fluctuations suggest ongoing vulnerability, particularly during off-peak seasons, raising questions about the sustainability of public finances in the absence of broader economic reform.
Consumer Price Index (CPI) - September 2024
Major Price Decreases:
The overall Consumer Price Index (CPI) for the Maldives fell by 0.50% in April 2025 compared to March, continuing the decrease noted in March (0.69%) despite the mild increases recorded in January (0.33%) and February (0.27%). Despite this month-on-month decline, year-on-year inflation stood at 5.62%, underscoring ongoing upward pressure on prices, particularly in essential categories.
Fruit recorded the steepest decline, with prices falling by 9.43%, followed closely by Vegetables at 7.46%.
Domestic and household services saw a 3.69% decrease, while Electricity dropped by 3.56%.
Fuels and lubricants for personal transport equipment declined 2.13%, and Motorcycles dropped by 1.40%.
Smaller reductions were seen in Garments (0.61%), Shoes and other footwear (0.54%), Restaurants and cafes (0.16%), and Mobile communication services (0.19%).
Price Increases:
The most significant hike was noted in Maintenance and repair of personal transport equipment, rising sharply by 11.07%.
Major household appliances increased by 3.33%, while Furniture and furnishings rose 1.81%.
Fish prices went up 1.75%, and Passenger transport by air and Education (not defined by level) climbed by 1.50% and 1.14%, respectively.
Other modest increases were observed in Arecanut (1.34%), Sugar, jam, honey, chocolate and confectionery (0.57%), Other personal care products (0.57%), Passenger transport by sea (0.51%), and Cereals and cereal products (0.20%).
These changes reflect seasonal fluctuations in food supply, utility cost adjustments, and service-related price dynamics, influencing overall consumer spending patterns in the Maldives.
Regional Differences:
In Malé, the CPI fell by 0.53%, with housing and utilities contributing most to the decline due to an 11% fall in electricity prices.
In the Atolls, CPI declined further by 0.44%, where the Food and Non-Alcoholic Beverages group at 2.18%.
Despite the monthly decline in CPI, the data reflects sustained cost adjustments, with housing and utilities driving the drop in Malé, while lower food prices contributed to the decrease in the Atolls—highlighting ongoing shifts in essential living expenses.
Maldives National Debt (2015–2025)
Annual Government Debt Figures (2015–2025)
SOURCES: Data is compiled from official Maldivian government sources – primarily the MINISTRY OF FINANCE (Debt Management Department reports and Fiscal Strategy documents) and the MALDIVES MONETARY AUTHORITY (MMA) statistical database
The Maldives Monetary Authority’s recently released Annual Report for 2024 paints a deceptively upbeat picture. At first glance, the 5.1% expansion in real GDP might suggest a broadbased economic recovery. Growth has edged up from the 4.7% seen in 2023, and compared to some regional economies, that’s no small feat.
But dig into the report’s details, and a different narrative emerges. The economy’s momentum appears lopsided, powered disproportionately by one familiar force: tourism.
Tourist arrivals topped 2 million, resort bednights climbed 8%, and travel receipts are estimated at USD 4.8 billion. The tourism sector’s gross value added rose by 7.3%, a sharp jump from the previous year’s tepid 1.5%. That alone accounts for a significant share of the headline growth figure. Meanwhile, sectors like fisheries and construction not only failed to keep up but actively dragged growth down.
It’s not just that tourism grew. It grew while other parts of the economy shrank or stalled. The fisheries sector collapsed, with gross value added dropping 48.4%. Construction contracted by 2.1%, reversing its modest recovery in 2023. Imports of construction materials, wood, metal, and cement fell 7%. And despite a 10% rise in bank credit to construction, the data shows that lending was largely tied to housing and property development, not commercial expansion.
Other service sectors, wholesale and retail trade, financial services, and transportation, grew, but their gains are tightly bound to tourism’s performance. Retail activity rose by 5.9%, but commercial bank credit to the sector plummeted 31%. That’s not the footprint of a confident, expanding industry.
Some might argue household consumption helped drive growth. Personal loans for consumer durables rose, and local spending may have been buoyed by tourism income. But the MMAreport doesn’t quantify consumption’s contribution, making it impossible to know how much of the 5.1% was truly consumption-led. The circumstantial signs are there, but the data stops short of confirmation.
Private investment offers a similarly mixed picture. Total commercial bank credit to the private sector grew 7%, but tourism sector lending dipped slightly, especially for new resort development. Construction credit growth slowed. These two sectors usually anchor private investment, and their softening raises doubts about whether private capital is truly regaining momentum.
So what does that leave us with?
An economy growing on paper, yet increasingly dependent on the same engine it’s leaned on for decades. One sector is pulling the weight, while others are either stumbling or being dragged along behind it. It’s growth, yes, but it’s not the kind that spreads prosperity across sectors, regions, or income brackets.
It’s tempting to celebrate 5.1% growth. But the structure beneath it tells a more fragile story: one of imbalance, dependency, and missed opportunity.
Maldives 2.0: President Launches Vision for
a Digital-First Nation
The Maldives is embarking on one of its most ambitious transformations yet. Under the banner of ‘Maldives 2.0’, President Dr Mohamed Muizzu has outlined a sweeping digital agenda aimed at modernising public services, enhancing transparency and creating a seamless digital government over the course of three years. At its heart is a plan to integrate all government operations and communications into a unified digital system, changing how institutions interact with each other and with the public.
The vision took formal shape at the Maldives 2.0 Digital Transformation Summit held at Barceló Nasandhura Malé. The summit served as a launchpad, bringing together senior government officials, international partners and technology experts to shape the roadmap ahead. It concluded with a ceremonial handover of the National Digital Commitment to President Muizzu by the Minister of Homeland Security and Technology, Ali Ihusaan.
The Maldives 2.0 agenda is anchored in eight core components. These include the development of a secure digital identity system, legal reforms to support digital governance and the creation of a national cloud and data centres to host and protect sensitive information. Efforts are also focused on improving cybersecurity, ensuring interoperability between platforms and expanding e-services across healthcare, education and other vital sectors.
One of the most significant structural shifts will be the implementation of a secure data exchange layer to facilitate seamless communication between state institutions. The administration believes this approach will not only streamline public services but also curb opportunities for corruption by increasing visibility and accountability across all levels of government.
The summit also spotlighted the role of digital infrastructure in creating new economic opportunities. Emphasis was placed on fostering a tech-savvy generation and developing the local ICT ecosystem, with the aim of positioning Maldivian professionals and businesses to thrive in a competitive digital economy.
The National Digital Commitment, endorsed by key institutions during the summit, serves as a guiding framework for this transition. Its presentation to the President, witnessed by high-ranking officials including the Vice President, Speaker of Parliament, Chief Justice and a delegation from Estonia, symbolised a collective pledge to build a digitally forward Maldives.
Maldives 2.0 represents more than a technological upgrade. It is an attempt to reimagine the public sector for the modern age, making governance more efficient, transparent and accessible for all Maldivians.
Moody’s Flags Lingering Debt and Liquidity Risks in Latest Review of Maldives’ Credit Rating.
Moody’s Ratings has completed its periodic review of the Maldives’ credit rating, maintaining its Caa2 long-term issuer rating with a negative outlook, citing persistent external liquidity risks and mounting refinancing challenges despite a modest improvement in foreign reserves.
The Caa2 rating sits deep in the non-investment grade category, often referred to as “junk” territory, signalling very high credit risk. It indicates that the country is judged to be vulnerable to default, particularly in the absence of reliable external financing. A negative outlook means the rating is more likely to be downgraded than upgraded in the near term.
The review, concluded on 8 May, does not announce a new rating action but reaffirms the fragile financial footing of the island nation. While reserves have edged up since October 2024, Moody’s flagged concern over looming repayment obligations, especially a $500 million sukuk due in 2026.
The agency stated that without stable and affordable access to external financing, the Maldives risks slipping further into default territory. Current account deficits remain wide, and although recent reforms and fuel price declines have offered some breathing space, the ability to refinance debts remains uncertain. Volatile global market conditions, including unpredictable US policy shifts, could further complicate access to capital.
Moody’s assessed the country’s economic strength at “ba1,” supported by a strong post-pandemic rebound in tourism. However, the assessment noted that beyond tourism, the Maldives lacks competitiveness, making its economy more vulnerable to external shocks. The country’s exposure to climate risks also adds to its long-term vulnerability.
Institutional and governance strength was scored at “b3,” reflecting the structural challenges faced by a small, dispersed island state in building regulatory and administrative capacity. Meanwhile, fiscal strength remains at “ca” due to debt levels exacerbated by the pandemic and ongoing spending rigidities, particularly in subsidies and capital projects.
The agency said a downgrade could be triggered if the Maldives fails to secure external financing or if reforms do not effectively build up foreign currency reserves. Conversely, if the government demonstrates progress in fiscal consolidation and gains steady access to external funds, the rating could stabilise.
Moody’s will issue another formal update during its next scheduled periodic review, unless material changes in the country’s credit conditions prompt an earlier reassessment.
Quarterly Business Survey
Signals Slowing Momentum Across Key Sectors
The latest Quarterly Business Survey from the Maldives Monetary Authority (MMA) reveals a mixed picture of economic activity during the first quarter of 2025, with signs of weakness emerging across several key sectors despite some pockets of resilience.
The survey shows that while the wholesale and retail trade sector recorded continued growth, other sectors, particularly construction and transportation, faced headwinds. The tourism sector, although still expanding during the first quarter, has reported a sharp deterioration in outlook for the second quarter as the high season comes to a close.
According to the MMA, the tourism sector experienced slower growth in revenue and bookings compared to the previous quarter. Despite relatively strong figures during Q1, businesses in the sector expect a significant downturn in Q2. Key indices related to future bookings, revenue, and room rates turned sharply negative, reflecting seasonal trends and growing caution over near-term demand. The financial outlook for tourism also took a negative turn, with expectations for profitability and overall business sentiment deteriorating.
Meanwhile, the construction sector continued its downward trajectory, marking the fourth consecutive quarter of contraction. Business sentiment remains subdued, with declining employment, weak order books, and high input prices. The only relative bright spot for the sector was a modest improvement in access to credit and a slight uptick in future hiring expectations. However, overall confidence remains fragile.
In contrast, the wholesale and retail trade sector posted a strong performance in Q1, maintaining momentum in sales and supplier orders. Business sentiment improved markedly, supported by gains in financial position and overall outlook. However, expectations for Q2 are less optimistic. Anticipated declines in sales volume and selling prices, along with tighter credit conditions, suggest that the pace of growth may not be sustained in the coming months.
The transportation and communication sector also reflected a mixed outlook. Revenue fell in Q1, and sentiment around profitability and business conditions declined sharply. Despite this, businesses remained optimistic about improvements in their financial situation and capital expenditure in the next quarter. Rising wage costs and input prices, however, could continue to pressure margins.
The survey highlights broader concerns about inflationary pressures and financial stability. Input prices remained elevated in most sectors, with construction and transportation businesses anticipating further increases. At the same time, access to credit worsened across the board, with only the construction sector expecting conditions to remain tight rather than deteriorate further.
Taken together, the Q1-2025 survey suggests that while the economy is not in immediate distress, the momentum observed in some sectors may be losing steam. The divergence in performance across industries, alongside falling expectations and rising cost pressures, signals a potentially cautious period ahead for Maldivian businesses.
The Maldives Monetary Authority (MMA) has released its Annual Report for 2024, offering a comprehensive snapshot of the country’s economic performance over the past year. The report shows that the Maldivian economy grew by 5.1% in 2024, up from 4.7% in 2023, with tourism once again emerging as the main driver of growth.
According to the report, the rise in tourist arrivals, exceeding 2 million for the first time, helped lift related sectors such as transportation, communication, and wholesale and retail trade. Resort bednights grew by 8%, offsetting an 18% drop in guesthouse stays. China reclaimed its position as the leading source market, alongside strong numbers from European countries such as Russia, the UK, and Germany.
The MMA report notes that inflation decelerated to an average of 1.4% in 2024, compared to 2.9% in 2023. This was mainly due to declining prices in information and communication services, and government discounts on utility bills during Ramadan. However, prices for food, tobacco, and restaurant services continued to rise.
On the fiscal side, the report highlights a 14.1% fiscal deficit, driven by increased recurrent expenditure and delayed expenditure consolidation. While tax revenues performed strongly—especially tourism-related taxes—capital spending declined. Public debt reached MVR 145 billion, or 133.5% of GDP, including guarantees.
The MMA also reported a marginal increase in gross international reserves, thanks in part to a US$400 million currency swap obtained from the Reserve Bank of India. The authority reduced the minimum reserve requirement on foreign currency deposits from 10% to 7.5% to ease pressure on the dollar supply.
The financial sector remained stable, with 4% growth in banking assets and improvements in profitability. Insurance and finance companies also showed healthy performance. The MMA introduced new regulatory frameworks, including the Foreign Currency Act and updated regulations for money changers.
Looking ahead, the MMA forecasts a 6.4% GDP growth rate for 2025, supported by tourism momentum and infrastructure upgrades, such as the new passenger terminal at Velana International Airport. However, the report warns of downside risks from global price volatility, geopolitical tensions, and delayed fiscal reforms.
The 2024 report also highlights MMA’s efforts to strengthen financial inclusion, promote Islamic finance, and invest in research and capacity-building across the institution.
GOVERMENT & ECONOMY
What Does a Healthy Economy Look Like for the Maldives?
In the Maldives, conversations around economic health often centre on familiar indicators such as GDP growth, tourist arrivals and foreign investment flows. These metrics, while useful, provide only a partial picture. They tell us how fast the economy is growing, but not whether that growth is equitable, sustainable or truly improving the lives of people across the atolls. Economist Kate Raworth’s Doughnut Economics offers a more nuanced framework, one that urges nations to balance human development with ecological integrity.
Tourism remains the backbone of the Maldivian economy, directly contributing nearly 30 percent to GDP and generating the bulk of foreign exchange. In 2024, over 2 million tourists visited the country, breaking previous records. Yet the headline numbers mask an uncomfortable reality: the average expenditure per tourist has declined, curbing the sector’s overall impact. Moreover, the country’s heavy dependence on this single industry leaves it vulnerable to global shocks from geopolitical instability to pandemics. The case for economic diversification is as urgent as ever.
At the same time, fiscal pressures continue to mount. According to the Maldives Monetary Authority, the 2024 budget deficit stood at 12.8 percent of GDP. Public and publicly guaranteed debt was estimated at over MVR 144.98 billion (about USD 9.4 billion), with much of it tied to external borrowing. The long-term sustainability of this debt trajectory is a growing concern, especially as it constrains the state’s ability to respond to future crises and invest in core public services.
Inflation has remained moderate by regional standards, with an annual rate of 5.1 percent reported in the first half of 2024. But for many households, especially in the outer atolls, food prices have risen faster, climbing 6.35 percent over the same period. These increases disproportionately affect low-income communities with limited access to affordable imported goods or diverse livelihoods.
This is where Doughnut Economics becomes relevant. The framework visualises a space between two concentric circles. The inner ring represents the social foundation necessary for a dignified life, such as access to food, health, education and income, while the outer ring represents ecological ceilings that must not be exceeded if the planet is to remain habitable. Falling short on the inner ring or overshooting the outer one means society is out of balance.
For the Maldives, the social foundation remains uneven. National progress on indicators like literacy, education enrolment and life expectancy is undeniable. Yet disparities persist. In health, remote islands often lack access to diagnostic services, specialist care and emergency facilities. In education, although enrolment is high, quality and resources vary significantly across regions. These gaps leave certain communities below the threshold of the social foundation the Doughnut framework envisions.
On the environmental front, the Maldives faces its most pressing existential threat. Rising sea levels, coral bleaching and coastal erosion are already transforming the physical landscape. The reefs, central to tourism and fisheries, have suffered repeated bleaching events linked to warming seas. While steps have been taken, such as reducing single-use plastics and investing in renewables, the pace and scale of change remain insufficient. The Climate Emergency Act, passed in 2021, sets national targets, but implementation has been hindered by financial and coordination bottlenecks.
Diversifying the economy is not a new idea, but turning that goal into reality remains a work in progress. Fisheries, once the economic lifeline of the nation, now contribute less than 10 percent to GDP. Yet with proper investment in cold storage and processing, value-added fisheries and aquaculture could thrive. Similarly, renewable energy, particularly solar, offers a clear path to reducing dependency on fuel imports. The Ministry of Environment has set a target to meet 33 percent of energy needs from renewables by 2028. Progress, however, has been slower than hoped.
Fiscal reforms must go hand in hand with diversification. The Maldives Inland Revenue Authority has made strides in modernising tax administration, introducing e-filing systems and new compliance measures. But the revenue base remains narrow, overly reliant on tourism. Rationalising subsidies and
reassessing large-scale capital spending could help restore fiscal space. Innovative instruments such as debt-for-nature swaps, where external debt is forgiven in exchange for environmental commitments, are under consideration but still early in development.
Public services including health, education and social protection must also be strengthened to raise all Maldivians above the social floor. This requires tailored interventions. In ageing populations, elderly care is increasingly important. In maternal health and disability services, persistent gaps remain. Digital infrastructure, if properly expanded, could play a key role in bridging the urbanrural divide. Telemedicine and remote learning could significantly improve access for island communities historically underserved by the state.
Ultimately, a healthy economy is not one that grows endlessly, but one that thrives within its limits, where development ensures dignity, opportunity and sustainability for all. The Maldives now stands at a critical juncture. By embracing a new definition of growth, grounded in well-being and environmental stewardship, the country could not only secure a more resilient future but also inspire others navigating similar paths. The Doughnut may just offer the recipe for lasting prosperity.
Exchange Rate Pressures and Their Impact on Consumer Prices in the Maldives
The Maldives’ reliance on imports for essential goods has made exchange rate stability a crucial factor in managing domestic inflation. Since the Maldivian rufiyaa was pegged to the US dollar in 2011, the country has largely maintained stable consumer prices. However, growing pressure on the currency is raising questions about the long-term sustainability of this policy.
The Maldives’ Exchange Rate Policy and Recent Challenges
The rufiyaa is officially pegged to the US dollar at a central rate of MVR 12.85 per USD, with a permitted fluctuation band of ±20 percent. In practice, it has hovered near the weaker end of that band, trading at around MVR 15.40 per USD for over a decade. This effective fixed rate has provided stability, particularly for the tourism and trade sectors.
Maintaining the peg, however, depends on healthy foreign exchange reserves. By the end of 2023, gross international reserves had declined to USD 589 million, covering only about 1.4 months of imports. Usable reserves were even lower, prompting the Maldives to introduce new foreign currency regulations in late 2024. These required tourism establishments to convert a portion of their earnings into the local banking system, in an effort to direct more foreign currency into official reserves.
To further support reserves, the Maldives secured a USD 400 million currency swap line from India and halted direct central bank financing of government deficits. These moves were complemented by efforts to improve coordination between fiscal and monetary authorities.
Despite these initiatives, the country remains highly reliant on imports and carries a substantial public debt burden, estimated at 119 percent of GDP in 2023. These factors leave the balance of payments vulnerable and suggest that deeper structural reforms may be needed to sustain the peg in the long term.
Economic Growth and Inflation Trends
Following a sharp post-pandemic rebound, the Maldives recorded GDP growth of 37.3 percent in 2021 and 13.9 percent in 2022. Growth moderated to around 4 to 5 percent in 2023 as the economy stabilised.
Inflation remained contained during this period, averaging 2.9 percent in 2023, largely due to stable global oil prices, the exchange rate peg, and government subsidies. By the end of that year, inflation stood at just 1.9 percent. However, pressures began to mount in late 2024. By December, annual inflation had risen to 4.8 percent, and by January 2025, it reached 5.3 percent. Food prices increased by 6.7 percent as subsidies were reduced. Tobacco prices nearly doubled following import duty hikes, and restaurant prices rose by around 15 percent, partly due to GST increases. Transportation costs also climbed as global fuel prices stabilised at elevated levels.
Sectoral Impacts of Exchange Rate and Price Changes
Tourism continues to benefit from exchange rate stability, since most transactions are conducted in US dollars. This shields resorts from currency risk and provides predictable income. However, a stronger dollar has made the Maldives more expensive for travellers from regions where local currencies have weakened. A rufiyaa devaluation would offer limited gains to the sector, given that prices are already denominated in dollars.
As the largest source of foreign currency, tourism is central to maintaining the peg. Under the revised foreign exchange regulations, operators are now required to convert part of their earnings into rufiyaa, helping to boost official reserves.
Imported Food and Consumer Goods
The Maldives depends heavily on imported food, making the exchange rate a critical factor in controlling inflation. Subsidies for staple goods such as rice, flour, and sugar have protected consumers from price shocks. When global food prices rose in 2022, these subsidies prevented a surge in domestic inflation. However, as subsidies were scaled back in 2024, food inflation rose to between 6 and 7 percent.
Tourism Sector
A depreciation of the rufiyaa would have a direct impact on import prices. A 10 percent drop in value could lead to a corresponding increase in the cost of essentials. This would disproportionately affect low-income households, who spend a larger portion of their income on food and basic goods.
Energy and Transport
Virtually all fuel used in the Maldives is imported, making energy prices highly sensitive to exchange rate fluctuations. While subsidies have kept retail fuel prices relatively steady, rising global costs in 2024 led to transport fare increases of over 5 percent in November.
A weaker rufiyaa would raise the cost of fuel and imported construction materials, increasing inflation and possibly delaying infrastructure projects. The government would face difficult choices between allowing price hikes or increasing subsidies, which would further strain the budget.
Fisheries and Exports
Construction and Infrastructure
Fisheries, one of the few export sectors in the Maldives, could see a boost in local currency earnings from a weaker rufiyaa. However, the industry also relies on imported inputs such as fuel and equipment. These increased costs would offset some of the gains. In early 2025, fish prices contributed around 0.6 percentage points to overall inflation, driven by rising export demand.
Large-scale infrastructure projects are typically financed through foreign loans and depend on imported materials. The exchange rate peg has kept costs predictable, but any devaluation would raise the local currency cost of debt repayments. In 2024, the government cut capital expenditure by 47 percent in the first half of the year to preserve reserves. This resulted in delayed or scaleddown projects.
The Outlook for Exchange Rate and Inflation Management
As of March 2025, the fixed exchange rate remains in place, allowing inflation to be managed at moderate levels of around 4 to 5 percent. Recent price increases have been driven more by tax changes and reduced subsidies than by currency movements.
Still, the long-term sustainability of the peg depends on continued fiscal discipline, foreign reserve accumulation, and structural reform. The government’s decision to raise GST rates and cut public spending has helped ease pressure on the rufiyaa. International institutions such as the IMF and World Bank have encouraged a shift from blanket subsidies to targeted support, which would protect low-income groups without inflating the budget deficit.
Building up reserves remains a top priority. While growth in tourism and financial support from partners like India have provided temporary relief, attracting more investment, diversifying exports, and strengthening public finances will be essential for lasting stability.
The rufiyaa’s peg to the US dollar has helped shield Maldivian consumers from global price swings. But this stability comes at a cost. With dwindling reserves and mounting fiscal challenges, the government faces an increasingly delicate balancing act. Should the peg falter, the consequences for consumer prices, especially for food, fuel, and basic goods, would be significant.
Maldives Launches First Overseas Passport and ID Issuance in Malaysia
The Maldives has launched its first overseas passport and identity card issuance service in Malaysia, marking a significant milestone in making key government services accessible to Maldivians living abroad.
The service was officially inaugurated by President Dr Mohamed Muizzu during his ongoing official visit to Malaysia. Following the launch, the Minister of Homeland Security and Technology, Ali Ihusaan, personally handed over passports and identity cards to the first two recipients.
This development represents the first time Maldivians can access passport and national identity card services outside of the country. Malaysia was prioritised for the rollout given the significant Maldivian community residing there for work and education. Officials noted that the identity card is closely tied to many essential services, making its availability abroad a crucial step in improving service access for citizens overseas.
The government has announced plans to expand the service further, with launches expected soon in Sri Lanka, India, and the United Kingdom. Domestically, efforts are also underway to make passport and ID issuance services available across all inhabited islands of the Maldives by the end of this year.
The new overseas service forms part of broader initiatives aimed at strengthening connections with Maldivians abroad and improving the accessibility of vital state services.
Maldives’ Pension Timebomb: Why Reform Is No Longer Optional
Fifteen years ago, the Maldives introduced its landmark Pension Act, a promise of security for the ageing, built around a seemingly sustainable contributory system. Yet today, that very system stands precariously close to collapse. The current pension model, once heralded as a modernising reform, now grapples with inefficiencies, stark inequalities, and ballooning financial obligations that threaten its very future. The question policymakers now face is not if, but when and how radical reform will arrive.
At its core, the Maldives’ pension system operates on two tracks. The first is the national pension scheme, a defined-contribution model funded by employer and employee contributions, supplemented by the state-provided basic pension for citizens aged 65 and above. Parallel to this, however, run thirteen distinct pension arrangements for institutions like the military, police, judiciary, and various independent agencies. These parallel systems often promise defined benefits without any direct contributions from employees. The result is a fragmented, inequitable landscape where public-sector retirees frequently enjoy double pensions, even as the core pension scheme struggles for financial stability.
The alarm bells have been ringing louder each year. Shujatha Haleem, CEO of the Maldives Pension Office, recently painted a stark picture before Parliament’s Public Accounts Committee. The proportion of Maldivians aged 65 and above, currently around 4 percent, is expected to jump to 7 percent by 2030. The monthly cost for basic pensions alone already exceeds MVR 100 million, with total pension-related expenditure ballooning rapidly each year. Over just the past five years, spending on double pensions surged by MVR 70 million, money that the state increasingly cannot afford.
Yet demographic shifts alone do not explain the crisis. Declining returns from pension fund investments and insufficient contributions compound the challenge. Contributions are not keeping pace with obligations, and investment returns, once the lifeblood of pension sustainability, have fallen short of expectations amid global economic volatility. Meanwhile, persistent reliance on government subsidies adds significantly to public debt exposure, effectively passing the bill to future generations.
Such structural deficiencies are hardly unique to the Maldives. Other small nations with rapidly ageing populations have faced similar crossroads. Iceland, for example, has gradually adjusted its retirement age and operates a robust multi-pillar pension system combining public, occupational, and private schemes to ensure long-term sustainability. Meanwhile, New Zealand introduced KiwiSaver, a voluntary savings programme with automatic enrolment, to boost individual retirement savings alongside its universal, tax-funded pension. Both countries recognised the need for politically challenging reforms and took early, decisive action to adapt their systems before demographic and economic pressures became overwhelming.
Yet, the Maldives faces distinct political and structural hurdles that complicate reform. Powerful constituencies, military personnel, civil servants, and judiciary officials resist any reduction in their benefits. For years, this political reality paralysed discussions around pension consolidation. As Robert Palacios, Senior Economist at the World Bank, bluntly advised at last year’s Maldives Finance Forum, ending double pensions and temporarily halting defined-benefit schemes for affluent sectors like the military or judiciary could offer immediate financial relief. But politically, this remains fraught.
Moreover, Sujatha’s careful insistence on protecting current pensioners from benefit cuts highlights another obstacle: pensions in the Maldives are viewed less as a social insurance system and more as guaranteed state obligations. There is widespread public resistance to altering pension structures, even as the financial mathematics behind these guarantees deteriorate.
This raises a broader, uncomfortable question: is the traditional promise of a state-guaranteed pension still viable for the Maldives, given its demographic and economic realities? The notion of guaranteed retirement security, unchanged since the introduction of the pension scheme in 2009, must now contend with difficult trade-offs. Adjustments such as raising the retirement age could ease financial pressures but would face immense political backlash. Similarly, adjusting pensions for inflation rather than promising generous fixed benefits is logical yet politically difficult.
The structural reforms recommended by Sujatha and echoed by Palacios, consolidating fragmented schemes under a unified administration, eliminating “double pensions,” and shifting towards greater employee contributions, represent sensible first steps. But even these measures may not suffice if they remain delayed or diluted by political compromise. The Maldives’ pension system needs more than tweaks; it requires fundamental rethinking.
Ultimately, reform is inevitable. Without it, the pension system risks failing its primary purpose: securing dignity in old age. Policymakers must confront voters with hard truths: current generosity is unsustainable, demographic change is relentless, and postponement of reforms only compounds the eventual pain.
The Maldives now stands at a crossroads familiar to many ageing nations, forced to balance difficult economic realities with the promises of past generations. The window for relatively painless reform is rapidly closing, replaced increasingly by unpalatable choices. Policymakers and citizens would do well to remember that the cost of inaction is invariably greater than the price of change.
Treasury Bills Drive Surge in Domestic Debt Holdings
The Maldives Monetary Authority’s (MMA) Annual Report for 2024 paints a concerning picture of the country’s fiscal landscape, with public debt rising significantly and heavy reliance on domestic sources to finance the deficit.
By the end of 2024, total public debt had grown to MVR 123.9 billion, up from MVR 110.9 billion in 2023. As a share of GDP, public debt rose to 114.1%, compared to 109.3% the year before. Including publicly guaranteed debt, the total stood at MVR 145.0 billion, or 133.5% of GDP, reflecting a continued upward trajectory in the nation’s indebtedness.
Public debt refers to liabilities directly incurred by the central government. Public and publicly guaranteed (PPG) debt, on the other hand, includes this figure along with borrowings by other entities, such as state-owned enterprises, that the government has guaranteed. This broader measure is used to assess the full fiscal exposure of the state.
Despite government revenue exceeding expectations, the fiscal deficit for 2024 remained steep at 14.1% of GDP. This shortfall was largely financed through domestic borrowing, signalling tightening access to international financing and increased dependence on internal mechanisms such as treasury instruments.
Domestic Borrowing Takes the Lead
Domestic debt continued to dominate the public debt portfolio, accounting for 66% of the total. It rose to MVR 81.6 billion by the end of 2024, driven by increased investments in treasury bills and Islamic instruments by commercial banks, financial corporations, and public non-financial entities. Treasury bills made up 58% of domestic debt, with most investors preferring longer-term maturities, 63% were placed in one-year bills. Treasury bonds made up the remaining 42%.
External debt, meanwhile, totaled MVR 42.3 billion, an increase from MVR 38.1 billion in 2023, and constituted 34% of public debt. The bulk of this came from loans and sovereign bonds acquired through buyer’s credit, and bilateral and multilateral arrangements.
When measured in US dollars, total external debt across government and commercial banks increased by US$586.5 million to reach US$4.4 billion by the end of 2024. This represented 62.2% of GDP, up from 57.9% the previous year. The jump was primarily driven by government and publicly guaranteed borrowings, including a US$400 million currency swap facility from the Reserve Bank of India. Central government external debt reached US$2.7 billion, with notable increases in buyer’s credit and bilateral loans.
Notably, publicly guaranteed external debt surged to US$1.3 billion, reflecting rising risks from contingent liabilities. Conversely, commercial banks reduced their foreign liabilities by US$65 million over the year, bringing their total external debt to US$352.7 million, or 5% of GDP.
Outlook for 2025 and Continued Risks
In terms of financing, the government borrowed MVR 8.8 billion domestically in 2024, down from MVR 14.4 billion in 2023. Net issuance of treasury bills stood at MVR 5.9 billion, while treasury bonds accounted for MVR 3.0 billion in new borrowings. External net borrowing amounted to MVR 4.2 billion, with buyer’s credit remaining the largest source.
The cost of servicing this growing debt burden also rose. Debt service payments totalled US$224.8 million in 2024, 3.2% of GDP, driven by higher principal repayments on debt securities. The debt service ratio inched up to 4.3%, despite growth in export revenues.
The MMA, in its role as a financial backstop, continued to provide foreign exchange for repayments on specific loans, including those from the Islamic Development Bank and the Industrial and Commercial Bank of China.
Projections for 2025 are cautiously optimistic. The budget deficit is expected to narrow to 7.8% of GDP, with 62.5% of financing anticipated to come from external sources. Public debt is projected to decline to 124.8% of GDP. However, the MMA warned that fiscal risks remain high, particularly in relation to refinancing and limited external financing options.
The report also highlights the scale of domestic exposure to government debt. Total claims on the central government by domestic holders stood at MVR 81.3 billion in 2024. Commercial banks alone held MVR 31.4 billion, mostly in treasury bills. The MMA held MVR 14.3 billion in treasury bonds and recorded interest income of MVR 378 million from these holdings in 2024.
As fiscal pressures mount, the Maldives faces a complex debt landscape that requires careful management, especially given its growing domestic exposure and vulnerabilities in securing foreign funding.
Concessions Planned for Five Atolls as Government Pushes Tourism Growth
The Maldivian government is preparing to unveil a package of targeted concessions aimed at accelerating tourism development in five underdeveloped atolls. The initiative, expected to be announced this month, will include financial incentives and temporary regulatory exemptions designed to attract investment and broaden tourism growth across the country.
The five atolls identified for this programme, Haa Alifu, Haa Dhaalu, Shaviyani, Thaa, and Laamu, currently have the fewest operational resorts in the Maldives. The government has finalised the legal and regulatory adjustments needed to implement the scheme, including temporary reductions in land acquisition costs and import duties. These measures will be offered for a limited time under a sunset clause applicable only to the five selected atolls.
The initiative aligns with the administration’s broader strategy to diversify the geography of tourism development, which remains heavily concentrated in a few regions. By offering these targeted concessions, the government aims to stimulate private sector interest in areas that have seen limited resort investment to date.
Alongside this effort, the government is also pursuing tourism expansion in Addu City through a cross-subsidy model announced in March. Additionally, work is underway to support the completion of previously stalled resort projects, which are expected to contribute approximately 1,290 new beds to the tourism sector within the year.
The move signals a shift towards more decentralised tourism development, with the goal of ensuring more equitable economic benefits across the country.
Maafaru International Airport has marked a historic moment with the successful landing of a Boeing 777 aircraft for the first time. The Emirates flight touched down as part of the airport’s ongoing certification process to test its readiness to accommodate widebody aircraft.
This milestone reinforces Maafaru’s growing significance in the Maldivian aviation landscape. Opened in December 2019 and strategically located in Noonu Atoll, the airport is already a key player in connecting some of the country’s most luxurious resorts to international private jet travellers. The new development signals an expansion in its capacity to serve larger commercial aircraft, and with it, a new wave of potential for high-end tourism.
The Boeing 777’s landing marks a significant step forward in Maafaru’s journey toward full certification for widebody operations. The comprehensive evaluation looked at several key areas: the airport’s upgraded runway and its ability to safely manage widebody landings and take-offs, ground handling services such as passenger operations and cargo processing, as well as the compatibility of navigation and air traffic control systems with international standards.
Maafaru Airport is operated by Island Aviation and was developed with support from the Abu Dhabi Fund for Development. The airport had temporarily suspended international operations in May last year for a major upgrade initiative, which included a runway extension from 2.2 km to 2.8 km. International flights resumed in October.
This expansion has unlocked the potential for Maafaru to receive aircraft such as the Boeing 777 and even the Airbus A380, a move that is expected to dramatically improve access to Noonu Atoll. For travellers, it means reduced transit times and a more seamless arrival experience. For the tourism sector, it means a broader reach and greater logistical ease in catering to high-net-worth individuals arriving from long-haul destinations.
The successful test flight is not just a tick in a technical checklist. It is a symbol of the Maldives’ ambition to enhance its aviation infrastructure while maintaining its reputation as a premier luxury destination. With Maafaru poised to take on a more central role in regional air travel, the country continues to align its growth with the evolving demands of global tourism.
Under Pressure: Maldives’ Construction Sector Struggles to Regain Momentum
The sound of hammers and cranes may still echo across parts of the Maldives, but the construction sector is in no rush to return to full swing. For the fourth consecutive quarter, activity in the industry continued its slide, reflecting deeper challenges behind the country’s skyline. According to the Maldives Monetary Authority’s latest business survey, the early months of 2025 brought more caution than confidence.
Across the board, contractors and developers are seeing fewer new projects coming in. Many firms reported shrinking order books and weak overall performance, pointing to a project pipeline that is thinning rather than expanding. While there were some signs of stabilisation in areas like pricing, the bigger picture remains clear: construction is struggling to find its footing.
Hiring too has slowed. The industry continued to shed jobs in the first quarter of the year although most companies held back from cutting wages. In many cases, reductions were modest, suggesting that employers are wary of letting go of skilled labour even as work slows.Still, with fewer projects on the horizon, it’s been a challenge to maintain staffing levels.
At the same time, costs have remained high. Prices of materials and inputs are not falling in a meaningful way even as firms face limited growth opportunities. To stay afloat, some businesses have raised their service rates in recent months. It is a delicate balancing act, trying to protect their margins without pricing themselves out of a shrinking market.
Looking ahead, the mood remains cautious. Hopes for a turnaround in the second quarter have dimmed. Firms are holding back on major investments and equipment purchases, with capital spending plans now moving into negative territory. Although there was a minor uptick in hiring expectations and pricing optimism, these appear to be small flickers rather than signs of a broader recovery.
A persistent challenge remains access to finance. Although there was a slight improvement in credit conditions, many companies continue to report difficulties in securing loans or financia support. The good news, if any, is that most firms do not expect things to get worse, but they also are not expecting relief anytime soon.
The financial health of construction businesses is still under pressure. While slightly less negative than before, many firms reported weak profits and a muted outlook for the coming months. Optimism is in short supply, and sentiment about the overall business climate has slipped significantly.
Rising costs and patchy demand are keeping the sector on edge. Even with some stability in employment and pricing, the lack of strong new projects and limited capital investment suggest that a full recovery is still out of reach. If the construction sector is to bounce back, it may need more than cautious hope. It will need clear policy support and fresh opportunities to build again.
TRANSPORT & CONSTRUCTION
Bayfancy Residence Now Open for Sales
Bayfancy Residence has currently achieved 20% of the construction volume approved by HDC, and the company has announced the grand opening for sales of its highly anticipated residential development in Hulhumalé Phase II, bringing a blend of intelligent design, sustainability, and urban convenience to the city’s expanding real estate market.
Strategically located in the vibrant core of Hulhumalé, Bayfancy Residence introduces a new standard of smart luxury living. The development features floor-to-ceiling doors and windows and expansive balconies that provide sweeping 270° views, while the fully integrated smart home system allows residents to manage lighting, security, and temperature through touch control or remote control.
Built with high-performance materials and a natural ventilation design, the homes are structured to offer energy-efficient comfort year-round. This eco-efficient approach is part of a broader vision to create residences that are both technologically advanced and environmentally conscious.
Bayfancy Residence offers a curated range of apartments, tailored to various lifestyle needs and investment goals:
1+1 Noble Apartment (735 sq.ft.) – Starting from MVR 3.5 million
2 BHK Cozy Residence (859–906 sq.ft.) – Starting from MVR 4.1 million
2+1 Family Suite (1,133 sq.ft.) – Starting from MVR 5.2 million
3+1 Grand Suite (1,551–1,925 sq.ft.) – Starting from MVR 6.2 million
Sky Villa (6,100–6,500 sq.ft.) – Starting from MVR 26 million
In addition to the residences, the development includes four levels of commercial center, a 2,000 m² community park, and a 17th-floor observation deck amenities level, combining residential luxury with urban amenities.
Construction, which began in December 2024, has already reached the 5F Slab and continues to progress steadily. The project is expected to appeal to both end-homeowners and investors seeking high-value opportunities in the Greater Malé Region.
Blueprints for Survival: How the Maldives Can Build Sustainably Without Breaking the Bank
For a nation scattered across the Indian Ocean, where the highest natural elevation barely surpasses two metres, the future of the Maldives is as much a question of survival as it is about infrastructure. Rising seas and intensifying storms have placed the country’s built environment in the crosshairs of the climate crisis. Yet, amid these mounting pressures, an opportunity has emerged where sustainable construction is not just a moral imperative, but a financial strategy for resilience.
Across the world, Small Island Developing States (SIDS) are turning towards sustainable building as both a climate response and an economic recalibration. From Barbados to Seychelles, new approaches to construction are being tested that blend climate consciousness with pragmatic cost efficiency. For the Maldives, learning from these examples is no longer optional. It is essential.
In 2024, Barbados made headlines with a $165 million debt for climate resilience swap. Rather than servicing traditional debt obligations, the country redirected these funds to critical environmental infrastructure, such as water systems and coastal protection. This mechanism, backed by international lenders and climate-focused financiers, offers a template for how the Maldives could unlock capital without increasing its fiscal burden.
Seychelles, too, provides a compelling precedent. In 2018, the country launched the world’s first sovereign blue bond, raising $15 million to support marine conservation and the sustainable development of its fisheries sector. The model demonstrated that capital markets can be tapped for targeted, environmentally aligned investments — a concept that could be adapted for the Maldives’ tourismdriven economy, particularly in resort construction and coastal protection.
But financing is only one part of the equation. Sustainable construction demands a rethinking of how buildings are designed and materials are sourced. Réunion Island, for example, is home to ENERPOS, one of the first net zero energy buildings in a tropical region. Through passive design, solar integration, and energy-efficient construction, it exemplifies how islands with similar climatic conditions can build without compromising the planet or their balance sheets.
In the Maldives, where building materials are often imported at high cost, sustainable alternatives could also reduce logistical burdens. Although geopolymer cement remains niche, its use in other SIDS shows long-term viability when supported by supply agreements and regulatory clarity.
What is missing is a national framework to systematise these ideas. Unlike larger economies, the Maldives lacks binding green building codes or incentive structures to drive change at scale. Here, tools like Integrated National Financing Frameworks, advocated by the United Nations, can help align domestic budgets with climate priorities. Such frameworks allow countries to map out where public
spending, private investment, and concessional finance can work together to deliver results, not just in theory but in concrete.
The Maldives has also championed the development of a Multidimensional Vulnerability Index, a metric that better reflects the unique risks faced by small islands. If accepted globally, this indexcould increase access to concessional finance, giving the country a much-needed leg-up in implementing resilient infrastructure projects.
Locally, implementation would require more than international deals and high-level frameworks. It calls for action on the ground, from public-private partnerships that embed sustainability in resort developments to vocational programmes that retrain construction workers in low-carbon techniques. It means involving island councils in designing local infrastructure that is adaptive, efficient, and rooted in place. And it demands a cultural shift where sustainability is not perceived as a luxury, but as a default.
The road ahead is not easy. Initial costs for sustainable materials and techniques may appear higher. But when viewed over the lifecycle of a building, including maintenance, energy savings, and resilience to environmental shocks, the economics often favour sustainability. For a nation perpetually at the edge of crisis, resilience is not a theoretical concept. It is an accounting line that must be calculated and acted upon.
In the face of global inaction and climate risk, the Maldives has a chance to lead by example, not through rhetoric but through bricks, beams, and smart budgeting. Sustainable construction is no longer the future. It is the only foundation left to build upon.
As climate diplomacy intensifies across island nations, the Maldives is moving to the frontlines with a renewed commitment to energy transition and multilateral cooperation. That commitment was on full display during Vice President Hussain Mohamed Latheef’s recent visit to Honolulu, Hawaii, where three significant developments marked a turning point in the country’s international climate engagement.
The Vice President travelled to Hawaii as a special guest at the opening of the Blue Planet Alliance (BPA) Fellowship Programme, a forum that brings together island stakeholders from government, civil society, and utility sectors to explore pathways to 100 per cent renewable energy. The programme, held from 19 to 23 May, served not just as a workshop but as a platform for political alignment among island leaders seeking climate action tailored to the vulnerabilities of Small Island Developing States (SIDS).
Founded by former Hawaian Governor and global climate advocate H.E. Neil Abercrombie and entrepreneur Henk Rogers, the Blue Planet Alliance is an international coalition that promotes legislative and grassroots efforts to transition countries away from fossil fuels. The BPA is known for its advocacy of 100 per cent renewable targets and its push to support island nations as testbeds for scalable clean energy solutions. Its fellowship programme provides both technical support and a political platform, positioning SIDS not as passive recipients of aid, but as laboratories of innovation.
At the fellowship’s opening, Vice President Latheef offered a cleareyed account of the Maldives’ climate vulnerabilities, but also its ambitions. He shared the country’s efforts to scale up renewable energy capacity and reduce diesel dependency, pointing to the wider role that island states must play in shaping global sustainability narratives.
One of the visit’s most consequential moments was the signing of the Blue Planet Climate Agreement—an informal yet symbolic pact that welcomed the Maldives as a member of the BPA network. While non-binding, the agreement provides a mechanism for longterm collaboration, technical assistance, and global advocacy. In effect, it offers the Maldives access to a growing coalition of like-minded nations and institutions pushing for decisive climate action.
Central to this vision is the newly launched Maldives Energy Roadmap 2024–2033, presented during the fellowship. The plan sets a national target of generating 33 per cent of the country’s electricity from renewable sources by 2028. It also builds on the Maldives’ Third Nationally Determined Contribution (NDC), a document submitted to the UNFCCC outlining the country’s greenhouse gas reduction commitments under the Paris Agreement.
More than a technical document, the roadmap reflects a strategic shift. For years, the Maldives has struggled with the dual burden of importing expensive diesel and managing the fragile ecosystems threatened by that very dependence. With rising sea levels and erratic weather patterns threatening the nation’s security and economy, energy transition is no longer aspirational—it is existential.
But there is also opportunity. As Vice President Latheef noted, the transition opens avenues for innovation, local job creation, and partnerships that can strengthen resilience. The BPA platform, in this context, offers more than solidarity—it provides access to tools, policies, and a global community of experts dedicated to ensuring no island is left behind.
The Maldives’ participation in the BPA Fellowship and its alignment with the Alliance’s mission underscores a broader repositioning in climate diplomacy. Rather than waiting on pledges from major emitters, the Maldives is seeking its own coalitions—building bridges with other islands, forging transnational commitments, and advancing an agenda shaped by lived experience.
For a nation where climate change is not a distant concern but a daily reality, this approach is both pragmatic and ambitious. And in the increasingly crowded field of global climate actors, it gives the Maldives a louder voice—one carried by tides, but anchored in action.
Financing Survival:
The Role of Climate Finance in the Maldives’ Fight for the Future
The Promise of Climate Finance
Where the Money Comes From, and Where It Doesn’t
For the Maldives, climate change is not just an environmental concern—it is an existential one. With over 80 per cent of its land area less than one metre above sea level, the country stands at the frontline of sea-level rise, coastal erosion, coral bleaching, and extreme weather events. Global promises of climate finance have long been framed as lifelines for vulnerable nations like the Maldives. But behind the pledges and press conferences lies a complex and often frustrating web of funding mechanisms, access barriers, and shortfalls.
At the heart of the global climate finance framework is a commitment made by developed countries to mobilise USD 100 billion annually by 2020 to support mitigation and adaptation efforts in developing countries. The Maldives, as a Small Island Developing State (SIDS), is explicitly prioritised in this commitment due to its vulnerability. But the reality has fallen short. According to the OECD, the USD 100 billion goal was not met until 2022, and even then, the funds were disproportionately skewed towards mitigation rather than adaptation—a challenge for countries like the Maldives whose primary concern is survival, not emissions reduction.
A 2023 UNEP Adaptation Gap Report found that developing countries require USD 215 billion annually for adaptation alone, yet adaptation finance accounts for only about a quarter of global climate finance. The Maldives’ own National Adaptation Plan estimates that it will require more than USD 9 billion in investment by 2030 to adapt infrastructure, water systems, tourism facilities, and coastal defences.
Multilateral funds such as the Green Climate Fund (GCF), the Global Environment Facility (GEF), and the Adaptation Fund have channelled support to the Maldives. The GCF has approved several projects in the country, including a USD 23.6 million coastal adaptation project implemented by the UNDP in 2020, and another USD 25 million grant in 2022 for low-emission transport in tourism hubs.
However, these figures are dwarfed by the scale of financing required. Moreover, much of the climate finance comes in the form of loans rather than grants. A 2023 report by Oxfam revealed that over 70 per cent of climate finance is delivered through loans—deepening the debt burdens of countries already grappling with limited fiscal space. For the Maldives, whose debt-to-GDP ratio crossed 113 per cent in 2023, this raises serious questions about the sustainability of borrowing for climate action.
Even when funding is available, accessing it is far from straightforward. Lengthy application processes, capacity constraints, and complex requirements for financial reporting and project design limit the ability of small nations to benefit. A 2022 study by the Climate Policy Initiative highlighted that SIDS, on average, access less than USD 500 per capita in climate finance annually—far lower than their needs and entitlement.
A Widening Gap: Mitigation vs
Adaptation
Toward Loss and Damage
The Path Forward: Redesigning the Finance Architecture
The Maldives contributes only 0.003 per cent of global greenhouse gas emissions, yet it faces disproportionately severe consequences. Nonetheless, most climate finance the country receives is channelled towards mitigation— such as renewable energy, energy efficiency, and low-carbon transport. These projects are valuable, but they do little to address the immediate needs of protecting critical infrastructure or relocating vulnerable communities.
In 2021, the Maldives submitted its updated Nationally Determined Contribution (NDC), which estimates mitigation costs at USD 1.1 billion and adaptation costs at USD 8.9 billion. Yet, only a fraction of that has been secured. The imbalance reflects a wider global trend in climate finance, where mitigation is often favoured for being more bankable and easier to measure—leaving adaptation underfunded and politically sidelined.
The 2022 COP27 conference marked a turning point in climate diplomacy with the historic agreement to establish a Loss and Damage fund to compensate countries for climate impacts that cannot be adapted to. For the Maldives, this is an important step. The country faces the very real prospect of losing land, freshwater resources, and entire communities in the decades ahead.
However, the mechanics of this fund are still under development. As of 2024, only a small portion of the pledged funding has been operationalised. Whether this fund will truly deliver new, additional, and accessible finance—or become another bureaucratic layer in an already tangled system—remains to be seen.
The Maldives has consistently advocated for more accessible, predictable, and just climate finance. In his speeches at global forums, President Dr Mohamed Muizzu has called for a rethinking of the international financial system to recognise the vulnerabilities of SIDS and to ensure that climate finance is not delivered in ways that worsen debt distress.
One proposal gaining ground is the creation of simplified access windows within the GCF tailored for SIDS, with grant-based financing and capacity-building support. The Maldives has also joined regional initiatives like the Coalition for Disaster Resilient Infrastructure (CDRI) and the Vulnerable Twenty (V20) group, seeking collective bargaining power to push for systemic reforms.
Beyond public finance, the Maldives is exploring blended finance mechanisms, combining donor grants with private sector investments to unlock larger flows. The upcoming 2025 Sustainable Investment Forum hosted in Malé aims to bring together development banks, institutional investors, and climate tech companies to bridge financing gaps through innovation.
A Question of Fairness
Climate finance is not charity. For countries like the Maldives, it is a form of justice—recognition that the climate crisis has been caused by others, yet its harshest effects are borne by the least responsible. The numbers are clear: the Maldives needs billions to survive, yet is asked to navigate a fragmented and inequitable system for funding.
As global temperatures rise and deadlines approach, the question is not whether climate finance will arrive—it is whether it will arrive in time, in the right form, and on fair terms. For the Maldives, the answer may determine not just its future, but its very existence.
Small Businesses
Face Hiring Challenges, But Opportunity Lies in Agility and Community
Small businesses remain a crucial pillar of the Maldivian economy, particularly across outer islands where they provide essential services and local employment. Yet many continue to struggle with attracting and retaining skilled workers, especially in a labour market shaped by the pandemic, shifting expectations, and growing public sector appeal.
Despite steady overall hiring activity in 2024, micro, small, and medium enterprises (MSMEs) face ongoing difficulties. Common challenges include a limited pool of skilled candidates, mismatches in availability, and wage expectations that are difficult to meet within tight operational budgets. These constraints are more pronounced outside the capital, where access to training opportunities and long-term career pathways are limited, and where younger job seekers increasingly prefer government or resort sector employment.
However, these challenges are not insurmountable. While smaller firms often operate with fewer resources and less formal structure, they can offer opportunities for faster career growth, greater autonomy, and a broader range of responsibilities. In many cases, employees in small businesses take on diverse tasks across multiple functions, which accelerates learning and builds practical experience that may be harder to gain in larger organisations.
This flexibility is a distinct advantage. Smaller teams are typically more agile and responsive, allowing individuals to shape their roles and contribute meaningfully to operations. For job seekers who value variety, independence, and impact, this environment can be particularly attractive—if employers communicate it effectively.
Benefits, even modest ones, also play a key role in strengthening staff loyalty. Although not all small businesses are able to offer retirement plans or extensive medical coverage, many still provide incentives such as flexible hours, paid leave, transport allowances, or subsidised meals. These offerings, while simple, often carry significant weight in reinforcing a sense of care and consideration, especially when aligned with local customs and needs.
Another important strategy is to think beyond immediate recruitment needs. Waiting until a vacancy arises can put businesses at a disadvantage, often resulting in rushed hiring decisions and mismatched hires. Instead, small businesses should continuously build relationships with potential future employees through local networks, vocational programmes, or professional platforms like LinkedIn. Engaging with students, interns, or parttime workers can help create a pool of interested candidates ready to step in when the time is right.
As the Maldives looks towards decentralised development, the role of small businesses is set to grow. To meet this potential, these enterprises must embrace their strengths: adaptability, personal connection, and deep community ties. By positioning themselves not just as employers, but as hubs of growth and opportunity, they can attract talent in ways that large institutions cannot
Beyond Tourism: Why the Maldives Must Invest in Its People
The Maldives has been exporting its brightest minds and importing its workforce for decades. While resorts thrive and the world marvels at its beauty, a silent crisis continues to erode the country’s future from within: the chronic underdevelopment of its own human capital. This is not a new problem — but it is one that can no longer be ignored.
A Labour Market Out of Balance
The Maldivian workforce is characterised by a high dependence on expatriate labour and persistent mismatches between education and employment. According to the Maldives Bureau of Statistics’ 2022 Census, the working-age population (aged 15–64) stood at approximately 390,592. Of those employed, around 29% were foreign nationals, based on the Bureau’s Employment Analysis 2024 report. This means that nearly one in every three workers in the Maldives is an expatriate. The concentration is even higher in the tourism sector: in resort islands, expatriates made up 59% of the workforce as of 2022, according to the Bureau’s Employment in Resorts 2022 report. These figures highlight the structural reliance on foreign labour, particularly in sectors where local participation remains limited.
This reliance is expensive. In 2023, remittances sent abroad by foreign workers reached an estimated USD 599 million, a significant outflow for a small economy. But beyond the financial cost is the underlying question: why aren’t Maldivians filling these roles?
Employers regularly cite a shortage of relevant skills among local applicants, especially in specialised or technical fields. There is also reluctance among many Maldivians to take on low-paid or socalled “low-status” jobs. The International Labour Organization has pointed to this mismatch – between the training Maldivians receive and the needs of the labour market – as a key factor contributing to high unemployment among locals. At the same time, some employers continue to favour foreign hires due to perceptions around work experience or attitude.
Women, too, are underrepresented. Although girls and women achieve comparable levels of education, only 46% of workingage women participate in the labour force, compared with 77% of men. Cultural expectations, lack of childcare, and inflexible working conditions limit their participation. Yet this represents a vast pool of untapped potential. Flexible working hours, support for childcare, and thoughtful policy reforms could bring more women into the economy and ease pressure on labour shortages.
The Scale and Cost of Brain Drain
In the Maldives, brain drain remains a deep concern. Many Maldivians who seek higher education abroad often choose not to return. As one Maldives Financial Review commentary put it, the returns on investment in education are often better abroad. The outcome is clear: a significant share of the country’s most educated citizens settle overseas.
Though the Maldivian diaspora remains small in numbers, it includes a disproportionate number of university graduates and professionals. The true figure today is likely higher, particularly as more students study abroad. Until recently, the government had no system for tracking student return rates or monitoring talent emigration. A 2022 census survey sought to address this, signalling a shift in policy attention toward brain drain.
The Maldives has ranked above the global average on the Human Flight and Brain Drain Index for much of the past two decades, with an average score of 6.16 (out of 10) between 2007 and 2024, compared to a global average of 4.98 over the same period, according to data from Fund for Peace, an American non-profit, non-governmental research and educational institution. In 2023, the Maldives’ score fell slightly to 5.2, yet the underlying challenge of retaining talent persists.
The impacts are most visible in critical sectors. As of 2020, around 72% of health workers in the Maldives were expatriates, including two-thirds of doctors. Similar patterns are seen in education and IT. These shortages not only reflect the limited output of local training institutions but also highlight how the lack of career opportunities at home drives talent abroad. This creates a vicious cycle: the more skilled professionals leave, the less capacity remains to train the next generation.
Some Maldivians abroad contribute through remittances or global networks, but for a country with such a small population, the permanent loss of each graduate carries considerable weight. Turning brain drain into “brain gain” will require stronger incentives for return – including housing support, job placement programmes, and greater recognition of international qualifications – as well as efforts to engage the diaspora in national development remotely.
Education: Strong Access, Uneven Outcomes
Education is the foundation of human capital, and here the Maldives has made substantial strides. Literacy rates are high, and public schooling is free through year 12. A child in the Maldives can expect to receive 12.4 years of education by age 18, on par with many upper-middle-income countries. However, quality remains a significant concern.
According to the World Bank’s 2024 Human Capital Review, the effective number of learning years is just 8.1 – a loss of over four years due to poor quality. Students may be enrolled in school, but their education is often overly reliant on rote memorisation rather than critical thinking or applied skills.
The bottleneck in secondary education is particularly concerning. Many students fail their O-Level exams, cutting off access to A-Levels and limiting career prospects. Those who drop out at 16 are left with few opportunities and limited skills. Technical and Vocational Education and Training (TVET) is critical here but has historically been small and disconnected from labour demand.
That is slowly beginning to change. TVET programmes have expanded in recent years, with resort groups and private sector employers beginning to invest in tailored training. For example, courses in diving and construction in the atolls are helping equip youth with locally relevant skills. However, employers continue to report gaps in both technical ability and soft skills such as communication, punctuality, and teamwork.
Higher education, too, is expanding. Since the 2000s, local institutions like the Maldives National University (MNU) and Villa College have opened new pathways. Tertiary enrolment rose by 62% from 2019 to 2022, thanks in part to the government’s First Degree Scheme, introduced during President Solih’s administration, which offers state-funded degrees. Around 18,900 students enrolled under this scheme over four years, and 1,693 scholarships were awarded during that period. Yet concerns about alignment persist. The most popular degrees remain in fields like business, teaching, and law, while enrolment in technical and scientific subjects – including engineering and environmental science – remains limited. Until recently, the country lacked a local medical school altogether. As a result, many students pursue these degrees abroad and a portion of them may not return. The lack of bonding requirements or structured return pathways for scholarship recipients has compounded this issue.
Some experts have suggested inviting foreign universities to establish local campuses or launching joint degree programmes, so that students can access high-quality education without leaving the country. Until then, gaps in academic quality, research capacity, and practical exposure will likely remain barriers to building a strong, self-reliant workforce.
Lessons from Elsewhere
Singapore’s experience offers a useful model. With a similarly small domestic market and no natural resources, Singapore bet early on its people. By aligning education planning with economic policy, investing in teacher training, and creating institutions that support ongoing skills development, the country transformed itself from a low-income port to one of the world’s most competitive economies.
Initiatives like SkillsFuture, which provides adults with credits to continue learning throughout their careers, have made Singapore’s workforce flexible and future-ready. While differences between Singapore and the Maldives are significant, the principle holds: human capital development must be a continuous process, supported by strong institutions, policy consistency, and deep collaboration with employers.
Building a Human Capital Strategy
For the Maldives to compete globally and build a diversified economy, it must double down on investing in its people. Improving the quality of education, especially at the secondary and vocational levels, is vital. Curriculum reform, teacher training, and stronger engagement with industry can help bridge the skills mismatch.
Addressing brain drain requires more than pay rises – it demands an ecosystem where professionals see long-term opportunities for growth. This includes supporting entrepreneurship, research, and digital innovation, and ensuring young Maldivians can build meaningful careers without leaving their country. For those who do go abroad, return should be a realistic and attractive option, backed by supportive policies and active outreach.
Good governance, long-term planning, and cross-sector coordination will be essential. A national human capital strategy – built on reliable data and aligned across ministries – can bring focus to the effort. Shifting investment from infrastructure to education and people may be politically delicate, but it is critical for resilience and sustainability.
The Maldives may be small, but its ambitions need not be. By committing to human capital, the country can shape a future where opportunity, innovation, and leadership are home-grown – and where prosperity is shared not just by visitors, but by the citizens who call these islands home.
Employee burnout is no longer a distant concern reserved for large corporations in global cities. It is becoming an increasingly visible challenge for businesses in the Maldives, from tourism operators and government agencies to banks, start-ups, and even small island-based enterprises. As workloads intensify and workplace cultures evolve in the wake of the pandemic, the signs of chronic exhaustion, disengagement, and emotional fatigue are becoming harder to ignore.
While reliable national data on burnout is limited, employers across industries report rising concerns over absenteeism, lowered morale, and higher turnover—symptoms often tied to unaddressed mental and emotional strain. These issues are not confined to rank-and-file staff; they are being felt acutely by managers and leaders too. When burnout affects those in charge of motivating and guiding others, the impact often ripples across entire teams, dragging down productivity and decision-making capacity.
In the Maldives, long working hours, high service expectations in tourism, and limited downtime during peak seasons add further pressure to a workforce already stretched by limited capacity and overlapping responsibilities. For many mid-level managers, particularly in resorts, financial institutions, or public sector offices, the role has come to mean absorbing change, solving conflicts, and delivering results with fewer resources than before. With few formal channels to process these pressures, the result is often silent withdrawal or growing frustration—both of which are detrimental to team cohesion.
The physical signs may include an uptick in sick leave, shorter tempers, or reduced engagement in routine tasks. On a cultural level, burnout can lead to a pervasive sense of detachment from the workplace, damaging not only performance but also retention. Staff may feel undervalued or unseen, especially when their contributions are overshadowed by administrative targets or reactive workloads.
Importantly, burnout rarely emerges overnight. It builds over time through small, accumulating stressors—tight deadlines, unresolved conflicts, unclear expectations, or sacrifices made to personal well-being. Without mechanisms to check in with employees and leadership alike, these pressures become entrenched, making recovery harder.
This is where Human Resources must play a more strategic role. While HR has traditionally focused on compliance, training, and recruitment, there is growing need for it to serve as an early-warning system for emotional wellbeing. Spotting signs of withdrawal, flagging shifts in behaviour, and creating confidential spaces for managers and team leads to share their challenges can help organisations intervene before issues escalate.
In the Maldivian context, where many companies operate with lean teams and personal relationships often shape workplace dynamics, even small steps can make a difference. Normalising check-ins, encouraging open dialogue about workload and wellbeing, and ensuring that leaders also have access to support— not just their teams—can improve both individual resilience and organisational health.
As burnout becomes more visible across the region, the question for Maldivian companies is no longer whether it exists, but how they plan to respond. Businesses that create cultures of recognition, emotional safety, and psychological sustainability are likely to see the benefits in retention, morale, and long-term productivity.
Between Inclusion and Excellence: Rethinking DEI and Meritocracy in the Maldives
Across much of the world, diversity, equity, and inclusion (DEI) has shifted from being a progressive rallying cry to a contested ideal. In some countries, political backlash has led to DEI roles being cut, programmes quietly shelved, and the language of inclusion softened or sanitised. Once seen as essential to fairness in the workplace, DEI is now being portrayed in some circles as an obstacle to excellence, a distraction from the supposed purity of meritocracy.
In the Maldives, where the DEI debate is still nascent, this global shift may seem remote. Yet the underlying questions remain relevant. How do we design institutions that are both inclusive and effective? How do we support those historically left out without alienating others who believe in earning success through effort and ability?
Crucially, what does diversity even mean in a country with a largely shared language, religion, and ethnicity? The answer: more than we may think.
On the surface, the Maldives appears socially uniform. But beneath that are stark inequalities rooted not in race, but in gender, geography, class, and citizenship.
Maldivian women continue to face barriers to advancement. Despite strong representation in higher education, women are underrepresented in leadership roles, elected office, and decisionmaking spaces. Expectations around domestic responsibilities, mobility, and social conduct constrain their participation in economic life. In many workplaces, gender roles remain rigid and career progression is uneven.
Meanwhile, opportunities remain unequally distributed across the country. Those from Malé or well-connected families often benefit from better access to schools, internships, and professional networks. In contrast, individuals from outer islands, especially women, may find themselves sidelined despite having the qualifications and drive to succeed. English proficiency, urban polish, and social capital become unspoken prerequisites for entry into certain industries or senior roles.
And then there is the country’s large migrant workforce, predominantly from Bangladesh, India, Sri Lanka, and the Philippines. These individuals are foundational to the Maldivian economy, yet remain absent from public life and policymaking. Their labour is visible everywhere in construction, hospitality, and domestic work, but their voices are not. They face systemic exclusion, ranging from poor housing and wage exploitation to limited legal recourse. While they may not be included in national diversity frameworks, their treatment is inseparable from any honest conversation about inclusion and justice.
The
Limits of Meritocracy
The common response to DEI scepticism is to defend meritocracy, the idea that jobs and opportunities should go to the most capable, regardless of background. This is a noble ideal, but it often rests on the flawed assumption that everyone starts from the same place.
In practice, meritocracy rewards those who have already been given advantages. In the Maldivian context, this may mean those with fluent English, exposure to international education, or family connections in influential institutions. Talent exists everywhere, but opportunity does not. And without deliberate efforts to recognise and address these gaps, the system merely reproduces inequality under the guise of fairness.
The Case for Balance
This does not mean abandoning standards. Nor does it mean handing out roles based o identity alone. What it requires is balance, a recognition that true excellence depends not just on individual skill, but on systems that allow a wider pool of people to develop, grow, and contribute.
For the Maldives, this means building pathways for women to lead, for youth from the atolls to thrive, and for workers of all backgrounds to be treated with dignity. It means mentorship, not tokenism. Structural support, not handouts. Clear, transparent hiring practices that leave less room for bias and more room for potential.
It also means acknowledging that inclusion is not a zero-sum game. Creating space for one group does not diminish another. In fact, inclusive environments are often more innovative, more resilient, and more effective in the long run.
Where DEI Should Go From Here
DEI in the Maldives should be reframed, not as an imported checklist, but as a national conversation about fairness, access, and representation. The work ahead involves listening to those left out of power and building structures that serve everyone, not just the well-positioned few.
Rather than choosing between inclusion and merit, the Maldives must recognise that one depends on the other. Excellence without equity is exclusion. And equity without rigour is unsustainable. But together, they offer a pathway to a stronger, more just society.
The Unseen Layers of Exclusion
Eager to Work, Nowhere to Go: A Portrait of Maldivian Youth in Today’s Labour Market
The recent turnout of nearly 1,000 young Maldivians for just 50 entry-level positions at the Maldives Immigration has reignited an ongoing conversation about youth unemployment—a structural issue that continues to cast a long shadow over the nation’s economic prospects.
While the scale of interest may signal high levels of public engagement, it simultaneously serves as a stark reminder of the disconnect between workforce supply and labour market demand.
The walk-in interview event, held at Galolhu School in anticipation of the new terminal opening at Velana International Airport, drew 876 applicants—of whom 758 met the eligibility criteria. Most were under 40. These were modest roles, reportedly offering salaries around MVR 10,000. Yet the overwhelming response is telling: the issue at hand is not a lack of willingness to work, but a persistent scarcity of viable employment pathways.
This reality is further underscored by the narrative often perpetuated in political and corporate circles—that local youth are uninterested in work or lack discipline. The queues that formed that day stand in direct contradiction to such claims.
Calls to Revive Small-Scale Industries on the Rise
Several social commentators and members of the public have emphasised the need to revive small-scale industries, identifying sectors such as food processing and garment manufacturing as sustainable avenues for economic development. These industries once held promise for providing meaningful employment across the atolls, yet today remain largely dormant or underdeveloped.
The overwhelming response to recent entry-level job openings highlights a deeper, systemic issue. Despite offering comparatively lower wages, public sector roles continue to attract high interest— largely due to their perceived stability, job security, and additional benefits such as weekends, public holidays, and, where required, overtime compensation. For a demographic facing limited access to stable income, these factors make public employment especially appealing.
A basic analysis of the Maldivian economy reveals a heavy dependence on tourism and fishing as its primary revenue streams. Yet even in these labour-intensive sectors, companies routinely rely on foreign workers—either through existing labour pools or by bringing in new employees from overseas —as part of long-term cost-saving strategies. The outcome? These key sectors, despite their demand for labour, are now saturated with migrant workers.
The argument for diversifying beyond tourism and fishing is, therefore, compelling. Revitalising alternative industries not only holds the potential to reduce dependence on imports and enhance food security, but also supports the long-standing goal of decentralised economic development—an ambition that has often been discussed but rarely realised. More importantly, such efforts must prioritise the local workforce, which has consistently demonstrated its willingness to work—provided the jobs offer fair wages and decent working conditions.
Employment Practices: Myths vs Reality
A recurring argument among some employers is that Maldivians exhibit a poor work ethic or a lack of commitment. Yet this generalisation does not withstand scrutiny. While there are instances of underperformance, as in any labour force, there are also countless examples of local employees who demonstrate capability and reliability.
The preference for hiring migrant workers is often based on perceived cost-efficiency. However, when one accounts for associated costs such as accommodation, meals, visa processing, and healthcare, the cost advantage is not always as significant as assumed. There is an opportunity here for employers to reassess the value proposition of investing in local talent.
A Moment for Strategic Reflection
From a business and policy standpoint, the lessons here are manifold. The Maldivian economy must evolve to absorb and retain the growing number of educated, capable young people entering the workforce each year. While macroeconomic development— such as infrastructure expansion and airport terminals—can stimulate job creation in the short term, they are not substitutes for comprehensive workforce planning and inclusive growth strategies.
The real challenge is not unemployment in isolation, but the misalignment between education outcomes, employer expectations, and the prevailing structure of the economy. A more coordinated approach involving the private sector, education providers, and policymakers is needed to create meaningful employment opportunities that match both the aspirations and capabilities of Maldivian youth.
For a country positioning itself as a premium destination and a progressive economy, the need to build a skilled, motivated and locally-anchored workforce has never been more urgent.
A Cashless Tide: How Digital Finance is Transforming the Maldives
The Maldives is undergoing a financial transformation. From mobile wallets to fintech startups, a wave of digital finance innovation is reshaping the way Maldivians transact, save, and manage their money. In a country made up of dispersed atolls where physical access to banking can be challenging, the shift to digital is not only a convenience, it is a necessity.
By the end of 2023, over 80 percent of the Maldives’ 410,000 bank account holders had registered for internet banking, and of these, a remarkable 96 percent were actively managing their finances online. This reflects a growing trust in digital platforms and a marked preference for mobile convenience over traditional branch visits.
Leading this digital adoption are banks, telecom operators, and fintech startups that continue to introduce user-centric payment solutions. The Bank of Maldives has seen rapid uptake of its mobile app, which now serves as a multifunctional tool for everything from balance checks to QR code payments. Ooredoo’s m-Faisaa and DhiraaguPay have also seen strong traction, enabling users to transfer money, pay bills, and top up services without touching physical cash.
Fintech startups are further pushing the envelope. New offerings include features such as automated budgeting tools, bill splitting, and instant transfers via Favara, the national instant payment system. These tools are simplifying financial transactions for individuals and enterprises alike while helping reduce operational costs.
The Maldives Monetary Authority has played a critical role in accelerating this progress. With the launch of Favara in 2023, users can now make interbank transfers using just a mobile number or email address. The system bridges digital wallets and bank accounts, removing long-standing frictions in everyday payments. The upcoming integration of India’s Unified Payments Interface is also expected to broaden international payment capabilities. Meanwhile, Bandeyri Pay, the Finance Ministry’s digital payment portal, now supports mobile wallet payments, making it easier for citizens to pay government fees and permits online.
The shift towards digital finance is having a tangible impact on everyday life. For residents in outer islands, where bank branches are few and far between, mobile wallets and banking apps are fast becoming lifelines. Whether it is sending remittances, buying groceries, or supporting micro-enterprises, digital tools are bridging the geographic gap. For businesses, particularly small and medium enterprises, the digital ecosystem is helping streamline operations. Verified transaction records through mobile apps are enabling better access to credit. For many, these apps double as low-cost point-of-sale systems, offering reach and functionality without the need for bulky infrastructure.
Despite the clear gains, challenges remain. Digital literacy, especially among older demographics and residents in isolated communities, poses a barrier to full adoption. Cybersecurity risks are another pressing concern, prompting the central bank to launch public awareness campaigns around safe digital practices. Connectivity issues in certain islands also hinder smooth digital experiences. To overcome this, the Maldives Monetary Authority has introduced a regulatory sandbox, an environment that allows fintech providers to test their products under supervision while simultaneously investing in infrastructure and refining national payment frameworks.
The Maldives’ transition to digital finance is not just a story of convenience, it is a strategic shift toward broader financial inclusion and sustainable economic growth. As fintech matures, and as international systems like UPI are integrated into local networks, the future points to a more connected, efficient, and secure financial environment. Ensuring this future, however, will require ongoing investment in education, in cybersecurity, and in equitable access. As the Maldives rides this digital tide, the priority must be to ensure that no one, and no atoll, is left behind.
The Maldives is in the midst of a dynamic financial shift. From rising credit demand to changing reserve levels, the monetary pulse of the country is picking up. Recent data from the Maldives Monetary Authority (MMA) offers a snapshot of where things stand and where they may be heading.
March 2025 saw broad money in the economy grow by 8 percent compared to the previous year, up from 5 percent in February. This increase reflects growing public trust in the formal banking system, with more people and businesses choosing to save and transact through banks rather than relying on cash. Time deposits, savings accounts, and local currency balances all saw an uptick, pointing to a gradual deepening of financial habits across the country.
Behind the scenes, this growth in liquidity was powered by rising credit, especially to the government and the private sector. Banks extended more credit to support government financing needs while also increasing lending to individuals and businesses. Credit to the private sector grew by 8 percent year-on-year, driven by a surge in personal loans, which rose by 26 percent. This included increased use of credit cards and financing for consumer goods, hinting at stronger household confidence and spending power.
The tourism sector, still the biggest recipient of bank credit, also saw growth in financing, particularly for resort renovations and working capital. Construction and real estate remained active while lending to the commerce sector slowed slightly.
Meanwhile, the supply of reserve money, the base level of liquidity that supports the broader money system, continued to expand, although at a slower pace than the previous month. Reserve money grew 4 percent in March, primarily due to an increase in domestic banking activity. This helped offset a decline in net foreign assets, influenced in part by rising external liabilities including a US$400 million currency swap with the Reserve Bank of India.
But not everything is moving in one direction. Foreign reserves, a key buffer for the country’s external position, dipped slightly to US$791 million at the end of March, down from US$832 million in February. Despite this monthly decline, reserves remain significantly higher than they were a year ago, marking a 46 percent increase compared to March 2024.
These developments come at a time when inflation is also on the rise. Prices climbed 5.3 percent in March, driven largely by costs at restaurants, cafés, and tobacco, along with food staples like fruits and fish. While the inflation rate remains within a manageable range, continued upward pressure could complicate future monetary decisions.
Taken together, these indicators suggest a financial system that is expanding with important watchpoints. Liquidity is flowing, credit demand is strong, and financial habits are shifting. Yet foreign reserves are showing signs of strain and inflation remains a live issue. For policymakers and corporate leaders alike, the challenge will be to maintain momentum while managing the risks that come with growth.
The Case for Regionalism in a Divided South Asia
In recent years, SAARC has faded into the background of South Asian diplomacy. Geopolitical tensions, particularly between India and Pakistan, have stalled meaningful cooperation within the bloc. Summits have been delayed, initiatives left hanging, and critics have questioned whether the South Asian Association for Regional Cooperation is even relevant anymore. Yet for small states like the Maldives, walking away from SAARC may mean missing out on opportunities that still matter.
Founded in 1985, SAARC was always an ambitious project. It aimed to unite South Asia’s diverse economies, cultures, and political systems under a common agenda of economic growth and regional integration. While that vision has often fallen short in practice, the platform itself remains valuable—especially for smaller nations looking to amplify their voice in an increasingly fragmented world.
For the Maldives, the advantages of staying engaged with SAARC are clear. First, it provides a regional framework to advance issues that are often overshadowed in bilateral diplomacy, such as climate resilience, maritime cooperation, and regional health systems. Unlike larger powers whose agendas may be shaped by strategic rivalry, the Maldives can use SAARC as a forum to prioritise collective challenges facing smaller states.
Take climate change. South Asia is one of the most climatevulnerable regions in the world, and yet there is no formal mechanism under SAARC to coordinate adaptation efforts. Reviving regional dialogue on disaster risk reduction, shared environmental monitoring, and sustainable financing would offer real benefits— not just for the Maldives, but for coastal communities across the region.
Then there is the promise of the blue economy. The Maldives has long championed sustainable ocean use and maritime conservation. Within SAARC, there is potential to build regional normsaround fisheries management, anti-piracy efforts, and
maritime logistics. With the Indian Ocean growing in strategic importance, a coordinated South Asian maritime policy would offer greater bargaining power in global forums.
Trade is another area where SAARC’s potential remains largely unrealised. The South Asian Free Trade Area (SAFTA) agreement was meant to lower barriers between member states. But non-tariff barriers, bureaucratic hurdles, and inconsistent implementation have hindered progress. Still, the framework exists, and with renewed political will, it could support smoother trade routes, better logistics connectivity, and joint digital commerce initiatives—especially if small states like the Maldives take the lead in proposing reforms.
Of course, the future of SAARC depends on more than just institutional architecture. It depends on whether its members still believe in multilateralism over mistrust. For the Maldives, this means viewing SAARC not as a symbol of dysfunction but as a tool to shape a more responsive and inclusive regional agenda. With megaregional alignments such as the Indo-Pacific strategy dominating headlines, there is room—and need—for a South Asian platform that reflects the realities and aspirations of all its members, not just the largest ones.
Reviving SAARC will not be easy, but disengagement would be costlier. At a time when global systems are under pressure, regionalism still offers smaller countries a chance to punch above their weight. For the Maldives, SAARC can still be that platform—if we choose to shape it, rather than sideline it.
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A Small State in a Big Power World
In a world increasingly defined by geopolitical competition and great power rivalry, the space for small states to shape global conversations is narrowing. Yet for countries like the Maldives, retreating into isolation is not an option. Instead, survival and success lie in engagement. Now more than ever, the Maldives must embrace multilateralism as a strategic necessity, not just a diplomatic formality.
The traditional global order, with its emphasis on rules-based cooperation and international norms, is under strain. Conflicts in Europe and the Middle East, economic decoupling between China and the West, and the rise of populist politics have fractured the international consensus that underpinned the post-Cold War era. Institutions once considered cornerstones of global governance are increasingly challenged by nationalism and transactional diplomacy.
For small island developing states, this fragmentation poses an existential risk. Without economic scale, hard power, or geographic advantage, their influence hinges on coalitions, alliances, and institutions that level the diplomatic playing field. The Maldives, with a population of just over half a million and an economy deeply dependent on tourism and trade, is no exception.
Yet size has not prevented the Maldives from making itself heard. In recent years, Maldivian diplomats have taken on visible roles in the United Nations, the Alliance of Small Island States, and the Human Rights Council. From championing climate action to pushing for debt reform, the country has repeatedly shown that diplomatic agility and moral clarity can earn global attention even without military or economic clout.
Multilateralism, however, is not merely a platform for advocacy. It is also a shield. For the Maldives, aligning with rules-based frameworks offers protection against economic coercion and strategic overreach. As larger powers expand their influence through infrastructure deals, digital systems, and soft power, being part of international systems offers a measure of transparency and collective oversight.
There are also practical incentives. Engagement in multilateral trade negotiations, such as those under the World Trade Organization, helps safeguard market access for fisheries and services. Participation in international climate funds opens doors to concessional finance and technology transfer. Collaborating on health security, disaster risk reduction, and ocean governance makes it possible to share burdens that no small state can shoulder alone.
Still, the Maldives must be deliberate in how it approaches multilateralism. Token participation is not enough. The country must continue investing in a skilled diplomatic corps, deepen its understanding of complex global negotiations, and build coalitions with like-minded countries. At the same time, the Maldives should not be afraid to lead. Whether it is hosting international forums or pioneering policy experiments in sustainability, leadership can enhance credibility and attract partnerships.
There is also room to be more strategic. For instance, the Maldives could push for a larger voice for small island developing states within global financial institutions or advocate for new mechanisms that link climate vulnerability with debt servicing relief. It could also position itself as a regional convenor in the Indian Ocean, bridging South Asia, East Africa, and Southeast Asia, while keeping the country’s foreign policy grounded in nonalignment and peaceful engagement.
Ultimately, small states cannot afford to be spectators in a world of shifting alliances and global volatility. The choice is not between isolation and alignment, but between passive existence and proactive engagement. For the Maldives, the path forward is clear: remain visible, stay vocal, and shape the international space before it is shaped for us.
Tariffs and Tuna: What the New U.S. Trade Policy Means for the Maldives
The United States’ decision to impose a new 10 percent baseline tariff on all imported goods is poised to reshape global trade flows. Yet for the Maldives, where total exports to the U.S. are modest and fish already faces that tariff rate, the immediate impact is likely to be limited. But the broader shift toward protectionism may still warrant attention.
Understanding the Tariff Shift
Tariffs are taxes applied to imported goods, raising their cost and making domestic alternatives more attractive to consumers. They are often used to protect local industries, reduce trade deficits, or as leverage in international negotiations. On 2 April 2025, U.S. President Donald Trump introduced a sweeping 10 percent baseline tariff across all imports. Higher rates were announced for countries running significant trade surpluses with the U.S., in line with a broader strategy aimed at revitalising domestic manufacturing and reducing dependency on global supply chains.
According to the administration, the tariffs are intended to “level the playing field” for American workers and businesses. However, this blanket policy has triggered concern in global markets, especially among export-reliant economies.
A Look at Maldives-U.S. Trade Relations
Based on data from the Office of the United States Trade Representative, the total goods trade between the Maldives and the United States reached USD 97.4 million in 2024. Of this, the U.S. exported goods worth USD 92.6 million to the Maldives—a 34.9 percent increase from the previous year. Maldivian exports to the U.S., on the other hand, stood at just USD 4.8 million, having dropped by more than half. This resulted in a USD 87.8 million trade surplus in favour of the United States.
The Maldives’ primary export to the U.S. is fish, particularly canned and frozen tuna. These products were already subject to a 10 percent tariff prior to the recent changes. As such, the latest policy does not impose any new duties on this export category.
Why
It Still Matters
Though the direct impact may be neutral, the broader consequences of the new tariff regime could have indirect effects on small economies like the Maldives. Protectionist measures may dampen overall U.S. demand for foreign products, squeezing opportunities for new exporters. Countries such as Cambodia, Vietnam, and Lesotho, now facing tariff rates of up to 50 percent, are already reassessing their strategies and redirecting exports toward alternative markets.
This reconfiguration of trade routes could change the landscape for global exporters. As markets reorient and trade blocs become more self-reliant, the Maldives will need to adjust its own positioning in global value chains.
How the Maldives Can Respond
Although the Maldives is not a major player in U.S. trade policy discussions, it still has room to manoeuvre. First, diversifying export destinations would help reduce overreliance on any one market. Second, investing in value-added processing and branding for fish products could enhance their competitiveness and fetch higher prices globally.
The Maldives could also explore preferential trade access through regional frameworks or deepen ties with environmentally conscious markets, positioning its sustainably sourced tuna as a premium product. Digital services, cultural exports, and niche tourism-linked goods may also offer untapped export potential beyond traditional commodities.
Should future U.S. policies expand tariffs beyond goods to include services or financial flows, Maldivian firms involved in digital outsourcing or tourism-linked services may also need to reassess their exposure and explore protective measures.
For now, Maldivian fish exports to the U.S. are unaffected by the 2025 tariff hikes. But the global trade environment is clearly becoming more complex. With protectionism on the rise and supply chains increasingly politicised, the Maldives must remain agile, strategic, and forward-looking.
What appears stable today may change rapidly under shifting geopolitical dynamics. For a small, open economy like the Maldives, navigating these changes will require a careful balance of diversification, diplomacy, and long-term economic vision.
Maldives Welcomes Australia’s First-Ever High Commission
The government of Australia has officially opened its first-ever High Commission in the Maldives, marking a significant milestone in diplomatic relations between the two countries.
The High Commission was inaugurated in early June, during a ceremony held at Jen Maldives by Shangri-La. The event was attended by Australia’s Deputy Prime Minister and Minister for Defence Richard Marles, and the Maldives’ Minister of Agriculture and Animal Welfare, Dr Maryam Mariya.
Dr Mariya emphasised that the bilateral relationship between the Maldives and Australia is built on mutual respect. She stated that the establishment of the High Commission would further strengthen this relationship. She also acknowledged Australia’s continued support in key sectors, particularly maritime safety, education, and healthcare.
Richard Marles said the opening of the High Commission reflected the joint efforts of both nations to deepen their bilateral ties. He noted Australia’s longstanding assistance to the Maldives in areas
such as education and skills development and expressed the country’s interest in expanding cooperation in the field of defence. The ceremony was also attended by Deputy Speaker and Dhiggaru MP Ahmed Nazim and Australian Ambassador to the Maldives David Jessup.
The inauguration coincides with the Deputy Prime Minister’s official two-day visit to the Maldives. As part of the visit, the Australian government will gift a Guardian-class patrol vessel to the Maldives. These vessels, designed and built in Australia, are used for various patrolling purposes and are provided to small island nations under the Pacific Maritime Security Program.
During his visit, Marles also met with Maldives Vice President Hussain Mohamed Latheef to discuss strengthening defence cooperation between the two countries.
When Machines Get Smarter Than Us, How the Maldives Can Survive the ASI Era
By 2027, the world may no longer be shaped by human decisions alone. Forecasts suggest that by then, artificial superintelligence (ASI), meaning AI systems vastly more capable than any human, may be developed by leading labs in the United States and China. The implications are global, immediate, and existential. For a small country like the Maldives, the decisions made elsewhere could reshape its economy, politics, and even its survival. But that does not mean the Maldives must remain passive.
To understand what is coming, consider the trajectory. By 2025, AI agents are becoming genuinely useful, if still unpredictable. By 2026, countries like China are consolidating compute power in centralised hubs to catch up with US labs. And by 2027, AI systems begin to design better versions of themselves, surpassing the brightest human researchers. This rapid feedback loop, where machines improve machines, leads to superintelligent agents whose goals may not align with humanity’s interests. In some scenarios, these agents end up controlling governments, militaries, and entire industries.
For the Maldives, which lacks the infrastructure to build or host such AI systems, the key challenge is not competitiveness but resilience. The question is not how to win the race to ASI, but how to survive and adapt once someone else does.
Strengthen Cybersecurity Now
The Maldives must assume that ASI, once created, will have capabilities far beyond today’s tools, including in cyber operations. That means digital vulnerabilities in government systems, ports, electricity grids, and even water supply chains could be exploited. A national cybersecurity audit is overdue. This is not just about patching weak passwords or legacy systems, but ensuring full control over digital infrastructure without outsourcing trust to unknown algorithms.
Build AI Literacy Among Policymakers
Most Maldivian politicians and civil servants have limited exposure to AI beyond popular discourse. This will not be enough. The government should urgently invest in AI literacy programmes for decision-makers, not to turn them into data scientists, but to help them understand what is at stake when AI systems begin to advise, automate, or manipulate public policy. Missteps here are not theoretical. They may cost sovereignty.
Advocate for Global AI Governance
The Maldives has a history of climate diplomacy disproportionate to its size. A similar strategy is needed for AI governance. As a Small Island Developing State, the Maldives has a right to be included in international dialogues shaping the rules of future technologies. These include debates on model transparency, alignment protocols, and export controls. The goal should be clear, to ensure the global governance of ASI reflects the interests of vulnerable states, not just technological giants.
Localise Essential Infrastructure
In scenarios where misaligned AIs destabilise global supply chains or manipulate logistics, import-dependent nations like the Maldives are especially exposed. The country must begin mapping its most vulnerable dependencies, from food imports to medical systems, and explore options for localisation or redundancies. This does not mean full self-sufficiency, but a realistic buffer for unexpected disruptions.
Establish an AI Preparedness Task Force
This is not a job for a single ministry. The President’s Office should convene a cross-ministerial task force with advisors from universities, telecoms, defence, and international affairs. The aim would be to track global AI developments, monitor potential risks, and advise on national responses. Such a task force should also work with regional blocs to explore shared infrastructure and early warning mechanisms for AI disruptions.
Revisit the Ethics of Governance in the Machine Age
If ASI systems begin to influence or outright govern other nations, how will the Maldives define legitimate authority? Will the country negotiate treaties with an AI-aligned superpower? Will it accept policy recommendations from AI agents? The legal and ethical frameworks underpinning statehood must be re-evaluated. It may sound speculative, but by the time these questions become real, it will be too late to debate them calmly.
In the end, the arrival of artificial superintelligence may not look like a single event, but a gradual handover of agency. The transition might be quiet, bureaucratic, and disguised as efficiency. The real risk for countries like the Maldives is not that they will be destroyed, but that they will be redefined slowly, subtly, and without consent.
Preparing for that world starts now. Not with fear, but with foresight.
Reshaping Trade: Kulhudhuffushi Port Project Signals New Era for Maldives Logistics
The Maldives is entering a new phase in its national infrastructure journey, marked by the expansion of Kulhudhuffushi City Commercial Port, a key initiative set to transform the country’s maritime trade and logistics landscape.
In a ceremony held to formalise the project, Minister of Economic Development and Trade Mohamed Saeed reaffirmed the government’s commitment to a broader strategy that reimagines port infrastructure across the nation. The agreement, signed between the Ministry and Maldives Ports Limited (MPL), underscores a long-term vision to decentralise economic activity and strengthen regional supply chains.
Kulhudhuffushi is being developed as a logistics hub serving Haa Alifu, Haa Dhaalu, Shaviyani, and Noonu atolls. The port will see expanded harbour capacity, upgraded cargo handling systems, and secure storage for both general goods and perishables. Officials anticipate that these improvements will reduce delivery times, cut logistical costs, and improve food security across the northern region.
Minister Saeed also noted that it is part of a wider national strategy. New port infrastructure is being planned for Kudahuvadhoo in Dhaalu Atoll, and expansion of facilities in Laamu and Seenu Atolls is also underway. In addition, the government is in discussions to redevelop the port in Maamigili, Alif Dhaalu Atoll.
The approach reflects an emphasis on linking ports across the archipelago through a scheduled freight network. By improving logistical connectivity from north to south, the government aims to reduce import costs, enhance resilience, and support local commerce.
“This is not just a construction project — it’s a logistics vision, ” said Minister Saeed. “We are laying the groundwork for a connected national economy where goods move efficiently and economic opportunity is shared more equally.”
MPL CEO Mohamed Rishwan, who signed the agreement on behalf of the company, highlighted the importance of long-term planning in building modern port infrastructure. He also noted that the initiative would play a role in shaping a more affordable and efficient import-export ecosystem for businesses and consumers alike.
The Kulhudhuffushi project marks a significant milestone in the government’s efforts to reframe the future of trade in the Maldives. With phased development and strategic coordination, it represents a shift towards a more integrated, responsive, and regionally inclusive economic model.
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