The 100-point surcharge on every dollar the Maldives borrows

Published analysis

Read the full article on Maldives News: The 100-point surcharge on every dollar the Maldives borrows

Standfirst. A lender is making a Maldives borrower buy insurance against the country itself. The all-in cost approaches 100 basis points a year.

Key facts

A Maldives financing document seen by Maldives News requires the borrower to pay for lender-arranged country risk insurance covering expropriation and currency inconvertibility, with cover equal to the outstanding loan plus six months of estimated interest.
Estimated cost is 65 to 85 basis points a year plus agent fees and VAT; all-in the drag approaches 100 basis points, about USD 1m a year on a USD 100m loan, priced only when the money is drawn.
The inconvertibility peril maps onto the Foreign Currency Act (32/2024, in force January 1, 2025: USD 500 per resort tourist, USD 25 per guesthouse guest) and MMA Regulation 2024/R-91 (effective October 1, 2024).
The buffers behind the pricing: official reserves USD 717.9m at end-April 2026 (down from USD 1,331.8m in March), usable reserves around USD 244m, against USD 535m of sovereign external obligations due in H2 2026 per Fitch; the parallel dollar hit a record 21.75 on August 5, 41 per cent over the peg.
Across the tourism sector’s roughly USD 875m loan book at April 2026 (MMA data), a flat 1 per cent surcharge would cost about USD 8.75m a year; against a weighted average lending rate of about 11.5 per cent, 100 basis points is roughly an 8.7 per cent rise in annual interest expense.
MATI says the MMA governor told the industry in February he intends to repeal mandatory conversion and move toward a floating rate; the MMA has neither confirmed this nor given a timeframe.