The World Bank’s latest “Maldives Development Update 2026” has highlighted a marked improvement in the country’s foreign‑exchange (FX) position, attributing the gains to the government’s tightened FX regulations and a series of fiscal tightening measures.
Under the amended Foreign Exchange Act, banks are now required to market tourism‑generated foreign currency at a fixed per‑tourist rate, a move designed to funnel more hard‑currency earnings directly into the national pool. A reciprocal currency‑swap arrangement with the Reserve Bank of India (concluded by the end of 2024) was also singled out as a supportive step.
Official FX reserves stood at USD 1.3 billion in March 2026, but after a debt‑repayment operation in April, the reserves slipped to USD 717.9 million by May. The government’s fiscal reforms have already narrowed the revenue‑expenditure gap to USD 330.6 million – roughly 4.3 percent of GDP.
The budget deficit for 2024 which was at USD 700.4 million, has reined in as government spending has been curtailed to 37.1 percent of GDP, an 8.3‑percentage‑point reduction from the previous year, while revenue rose to 33 percent of GDP, a 12 percent year‑on‑year increase.
In addition, the Maldives has met its obligations on sovereign sukuk issuances, State‑Bank of India (SBI) loans and the currency‑swap repayments, further bolstering its debt profile, the World Bank added.
The World Bank described the reforms as positive steps toward macroeconomic stability, while cautioning that sustained vigilance will be needed to keep the fiscal gap from widening again.