Maldives slashes 2026 foreign aid projection after 2025’s grants fall flat of estimate

Finance Minister Moosa Zameer accompanies President Dr Mohamed Muizzu to participate in the 4th International Conference on Small Island Developing States at Antigua and Barbuda, May 25, 2024. (Photo/President's Office)

The Foreign Ministry projects the Maldives will receive MVR 374 million in grants next year – a figure that is roughly 14 percent of the MVR 2.6 billion that the country had expected to, but failed to receive this year.

The Maldives’ debt crisis has made it harder for the country to secure the foreign aid it desperately needs. Out of the MVR 2.6 billion the government had expected to receive in grants this year; it has only managed to secure MVR 400 million – less than 15 percent of the original projection.

The Finance Ministry on Thursday submitted a proposed budget of MVR 64.2 billion for 2026 – marking the highest annual budget on record. This high figure is mostly due to the staggering debt obligations due next year.

Key budget highlights:

Budget total: MVR 64.2 billion
Expenditure: MVR 49.2 billion
Recurrent expenditure: MVR 39.9 billion
Capital expenditure: MVR 9.3 billion
Debt repayment: MVR 12.9 billion
Revenue and grants: MVR 40.4 billion
Budget deficit: MVR 8.8 billion (7.1 percent of GDP)

The grant projection is MVR 374 million; MVR 324 million in project funding, MVR 24 million in money grants, and another MVR 25 million in donations.

The country expects to receive MVR 85 million in grants from bilateral partners next year, including MVR 73 million in grants from Maldives’ closest neighbor and development partner, India.

The country also expects to receive MVR 4 million from the United Kingdom and MVR 3 million from Japan.

But there is no grant projection from China, a country that President Dr. Mohamed Muizzu’s administration fosters close relations with.

The Maldives has been struggling under the weight of staggering debt obligations, which now stands at 106 percent of the country’s GDP, according to the most recent report by the central bank.

The Maldives has a USD 100 million debt repayment due in November, and a staggering USD 1.1 billion due in mid-2026.

Citing default risks, Moody’s has downgraded Maldives’ credit rating from CAA1 to CAA2, while Fitch downgraded the country’s credit rating from CCC+ to CC.

The World Bank has warned the situation makes it harder for the Maldives to secure foreign assistance to alleviate the crisis it faces.