The Maldives has recorded a notable improvement in its foreign exchange position following the implementation of new currency regulations and fiscal reforms, according to the World Bank’s latest Maldives Development Update 2026.
The report highlights that changes introduced under the amended Foreign Exchange Act have played a key role in boosting foreign currency availability. The regulations require banks to channel tourism-generated foreign exchange into the domestic financial system through a fixed per-tourist conversion mechanism, increasing the flow of hard currency into the country.
The World Bank also pointed to the currency swap arrangement established with the Reserve Bank of India by the end of 2024 as an important measure supporting external liquidity and financial stability.
Official foreign exchange reserves reached USD 1.3 billion in March 2026. Although reserves declined to USD 717.9 million in May following a major debt repayment in April, the report noted that the country’s overall foreign currency position has become more resilient compared to previous years.
The World Bank further reported that government efforts to reduce spending and strengthen revenue collection have helped narrow the fiscal deficit. The gap between government revenue and expenditure fell to USD 330.6 million, equivalent to around 4.3 percent of gross domestic product (GDP).
Government expenditure was reduced to 37.1 percent of GDP, representing a significant decline from the previous year, while state revenues increased to 33 percent of GDP, reflecting strong growth in collections.
The report also noted that the Maldives successfully met several major debt obligations, including repayments related to sovereign sukuk issuances, State Bank of India loans, and commitments under the India-Maldives currency swap arrangement.
According to the World Bank, these measures represent important progress toward restoring macroeconomic stability and improving confidence in the country’s financial outlook. However, the institution cautioned that continued fiscal discipline and prudent economic management will be necessary to sustain these gains and prevent future pressures on public finances.
