Budget 2026: Maldives projects India to be biggest source of foreign aid

The biggest source of foreign aid to the Maldives next year will be India, according to the 2026 budget projections by the Finance Ministry.

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 foreign aid projection for next year is MVR 374 million; with MVR 324 million in capital project grants, MVR 24 million in cash grants, and another MVR 25 million in donations.

The country expects to receive MVR 85.6 million in grants from bilateral partners next year, including MVR 73.6 million in grants from Maldives’ closest neighbor and development partner, India.

It makes for 19.7 percent of the total projected foreign aid, and 86 percent of grants from bilateral partners.

Top sources of grant aid (by country):

• India: MVR 73.6 million
• United Arab Emirates: MVR 4.98 million
• Japan: MVR 3.89 million
• Italy: MVR 2.25 million
• Netherlands: MVR 820,051

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.

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.