Here’s the short version: 2025 was a really, really good year for the Maldivian economy. Surprised? Don’t be.
The Maldives Monetary Authority (MMA) earlier released its 2025 Annual Report, and the headline number jumps off the page. Real GDP grew by 6.3% in 2025. That is almost double the 3.5% growth recorded in 2024.
But the report does not stop at celebrating last year. It also looks at the storm clouds gathering over 2026. So let us talk about the whole story together since the MMA Annual Report 2025 covers a lot of ground. We will break it down piece by piece, in plain English.
What this report actually is
This of the MMA as the country’s main money manager. After all, that is exactly what you think of MMA for all these years anyway. It runs our central bank. Every single year it puts together a giant report explaining what happened with our economy, our prices, our banks, our money, and our financial system. The MMA Annual Report 2205 is essentially that yearly health check-up. The report came out in late April 2026, and all the data inside is as of that month.
Now, the report is technically a legal document. The MMA has to publish it under Article 35(b) of the Maldives Monetary Act 1981. So this is the official version of what happened, signed off by the people running our central bank. The MMA Governor for the period is Ahmed Munawar, with Aishath Asna Hamdi serving as Deputy Governor.
Tourism: the engine that power the whole year
If our economy was a car in 2025, tourism was definitely our engine. Sure, it required regular oil changes and whatnot, but it performed its functions brilliantly. The sector’s gross value added grew by 8.0% during the year.
Tourist arrivals reached 2,246,516 visitors. That is a 10% jump from 2204 and a 32% increase compared to pre-pandemic 2019. We even smashed the government’s own annual target of 2.2 million tourists.
December 2025 alone brought in 224,455 visitors. That single month set a new all-time record for monthly arrivals to the Maldives, beating the previous record from February 2024.
There is a twist in the numbers
Here is where things get interesting. Total bed nights only grew by 2% during the year. So while more people came, they actually stayed for slightly shorter trips. Average stay dropped from 7.4 days in 2024 to 7.0 days in 2025.
Even more curious, guesthouse bed nights grew by 16% but resort bed nights actually fell by 1%. So guesthouses are stealing the spotlight from resorts when it comes to longer stays.
Travel receipts (the actual money tourists spent) climbed to USD 5.6 billion, up from USD 4.8 billion in 2024. That is a 16% jump. Compared to 2019, travel receipts are 76% higher today.
Where did everyone come from?
Europe remained our biggest region, accounting for 59% of all arrivals. Within Europe, Russia kept the number one spot at 12% of arrivals. The UK came second at 9%, followed by Germany and Italy at 7% each.
On its own, however, China was the single largest country market with 15% arrivals. India came next at 6%.
On the supply side, the total number of resorts rose to 175 by the end of 2025, up from 170 a year earlier. Guesthouses grew to 877. Total operational bed capacity grew by 4%, or about 2,627 beds. The new terminal at Velana International Airport (VIA) opened in July 2025 with capacity for 7.5 million passengers a year, and by year-end all international flights had moved to the new terminal.
Fisheries: the comeback kid of 2025
If tourism was the engine, fisheries was the comeback story. The sector had crashed badly in 2024, falling by 33.1%. Then in 2025 it bounced back with a massive 30.8% rebound.
Fish purchases by domestic processing companies shot up by 66%, hitting 88.3 thousand metric tonnes. Fish exports? They grew by 92%. Frozen skipjack tuna exports alone surged 158%.
The bulk of the action came from skipjack tuna, which made up 82% of total fish purchases. Yellowfin tuna purchases also rose by 20%. Local prices for both kinds of tuna shifted during the year, partly because of administered price revisions back in July 2024.
Construction and real estate quietly picked up
Construction does not usually grab headlines, but the sector quietly turned around in 2025. After shrinking by 1.7% in 2024, construction grew by 3.7% last year. Real estate grew by 3.1%.
Construction-related imports (like wood, cement, and steel) grew by 11% in 2025 after falling 7% the year before. Banks also lent more to the sector, with construction and real estate credit growing by 13%.
A big chunk of this lending went into new resort developments and housing projects. So even though tourists were swimming in our lagoons, builders were busy creating new resorts to host the next wave.
The one sector that struggled: wholesale and retail trade
Not every sector had a good year though. Wholesale and retail trade actually shrank by 5.0% in 2025, even while tourism boomed. That seems strange at first, right? More tourists usually means more shopping.
But the explanation is buried in the import numbers. Total imports stayed roughly flat for the year. So while tourism receipts went through the roof, the goods flowing through the country did not really pick up. Bank lending to the sector grew by 10% though, which was a sharp reversal from the 31% decline of 2024.
Why your shopping bill went up in 2025
Now for the less fun part. Prices rose much faster in 2025. Inflation jumped to 4.0% from just 1.4% in 2024.
The biggest single reason behind the price rise was tobacco. Tobacco prices shot up by an absolutely massive 94.2% in 2025. That happened because the government raised import duties on tobacco and related products in November 2024 under the amended Export-Impact Act. The full impact then flowed through into 2025 prices.
Food prices and the cost of eating out at restaurants and cafés also pushed the inflation number up. The cost of restaurant services rose by 5.5% during the year.
Not everything got more expensive. Energy-related items actually dropped in price. So did information and communication services. The government even gave Ramadan-related discounts on utility bills in April 2025, and electricity tariff rates were reduced in 2025.
Inflation actually slowed down as the year went on. It peaked at 5.5% in the first quarter, then eased to 4.8% in Q2, 3.9% in Q3, and just 1.8% in the final quarter. So by the time December rolled around, prices were rising at a much gentler pace.
The government’s money story is genuinely encouraging
Now let us look at how the government managed its own wallet. This part of the MMA Annual Report 2025 contains some genuinely good news.
The fiscal deficit dropped sharply to 4.1% of GDP in 2205. That is the lowest deficit recorded since the pandemic. To compare, the deficit was much higher in 2024.
In plain words, a fiscal deficit just means the government spent more money than it earned. So a smaller deficit means the gap between earnings and spending shrank. The government is doing a better job of living within its means.
How did this happen? Two things
First, revenue climbed. Tourism taxes brought in serious money. The Tourism Goods and Services Tax (TGST) pulled in MVR 11.0 billion alone. The Green Tax doubled from 6% to 12% on most resorts starting January 2205, and that change brought in MVR 2.3 billion. Departure Tax also climbed to MVR 1.9 billion thanks to higher departure charges introduced in December 2024.
Second, the government slashed capital spending. Capital expenditure dropped by MVR 6.5 billion. Specifically, spending on roads, bridges, airports, and big infrastructure projects fell by MVR 6.2 billion. Some projects got cancelled outright. Others got handed over to state-owned enterprises to execute at cost.
Total revenue (excluding grants) hit MVR 39.4 billion. Total expenditure dropped to MVR 44.2 billion. The fiscal deficit ended up MVR 4.5 billion lower than the approved budget for 2025.
Public debt: high, but at least heading down
Public debt still sits very high. Total public debt reached MVR 134.4 billion. As a share of GDP, it dropped slightly to 112.6% from 114.0% in 2024.
When you include publicly guaranteed debt, the total reached MVR 154.8 billion, or 129.7% of GDP. That number is still very high, but dropped from 133.4% in 2204. So the debt-to-GDP ratio is finally heading in the right direction.
Most of the public debt is domestic (68%). External debt makes up the remaining 32%. The government mostly raised money in 2205 by issuing treasury bills and treasury bonds at home.
Monetary policy: the MMA did something it had not done in over a decade
Now let us get into one of the most important shifts in the entire report. The MMA in 2025 did something it had not done in over ten years. It restarted open market operations.
Here is what that means in really simple terms. Imagine the banks have way too many Rufiyaa coins sloshing around in their vaults. That extra money pushes prices up and creates pressure on the exchange rate. So the MMA basically “soaks up” some of that extra Rufiyaa to keep things balanced.
In July 2205, the MMA launched Structural Liquidity Operations (SLOs) with tenors of 28, 91, 182, and 364 days. Then in December 2025 it launched 14-day Main Liquidity Operations (MLOs) on top. By the end of the year, the MMA had absorbed about MVR 3.0 billion of surplus Rufiyaa through these tools.
The MMA also lowered key interest rates
The Standing Deposit Facility rate dropped from 1.50% to 0.50% in July 2025, then dropped again to 0.25% in November 2025. The Standing Lending Facility was cut from 10.00% to 7.00%. These changes were meant to discourage banks from over-relying on these facilities and to push them to trade more with each other instead.
Foreign currency: the big policy shake-up
The really big money story sits in foreign currency policy. The Foreign Currency Act kicked in on January 1, 2025. This law has one main goal: keep foreign currency earnings inside the domestic banking system instead of letting them slip abroad.
Think of it like a leaky bucket. The country was bringing in plenty of US Dollars from tourism. But too many of those dollars were leaving before our banks could even seen them. The new law plugs some of those leaks.
Under the new law, all 182 resorts had to register, along with many guesthouses, travel agencies, and safari vessels. These businesses then had to convert foreign currency through commercial banks. By year-end, a total of USD 670.8 million had been converted, with about 75% of that flowing into the MMA.
The minimum reserve requirement on foreign currency deposits was also cut from 7.5% to 5.0% in July 2025. This released more dollars for businesses and the public to actually use. The MMA also extended its USD 400 million swap facility with the Reserve Bank of India (RBI), originally signed in October 2024. That swap acts like a giant safety net for the country’s dollar supply.
Banks had a really good year too
The banking sector had a strong year all around. Total bank assets grew by 17% to reach MVR 111.1 billion. Deposits jumped by 21%. Loans grew by 19%. Profits climbed too, with pre-tax profit rising 14% to MVR 5.2 billion.
Bad loans (called non-performing loans or NPLs) actually shrank as a share of total loans, falling from 4% to 3%. Banks set aside enough money in loan loss provisions to cover 125% of NPLs, so they have a serious cushion if things go wrong.
Banks remain strongly capitalized. The total capital ratio sits at 46%, way above the 12% regulatory minimum. The leverage ratio sits at 18%, well above the 5% minimum.
What about non-bank financial institutions?
Finance companies grew their assets by 16% to MVR 4.8 billion. However, their non-performing loan ratio crept up from 16.1% to 17.2%. So while they grew, asset quality slipped a bit.
The insurance sector recorded strong growth. Gross written premiums climbed thanks to a 19% rise in the number of insurance policies issued. General insurance penetration reached 1.9%, and insurance density rose from USD 209.94 to USD 237.91 per person.
A new Insurance Act (Law No. 13/2025) came into force in August 2025. This law sets up a proper framework for regulating insurance companies and protecting policyholders. It is the first comprehensive insurance law the country has had.
Payment systems are quietly transforming Maldivian life
One of the quieter but most important stories in the report is the payments revolution. FAVARA, the country’s instant payment service, exploded in 2025. The number of FAVARA transactions jumped by 123% going from 7.8 million in 2024 to 17.3 million in 2025.
Cheque usage kept falling. The volume of cheques processed dropped by 18% during the year. In value terms, cheque transactions fell by 6%.
Basically, more and more Maldivians are paying each other through their phones instead of through cheques and cash. This shift is real and it is here to stay.
The total value of FAVARA transactions hit MVR 51.4 billion in 2025, more than double the MVR 23.7 billion in 2024. The MMA also raised the FAVARA transfer limit to MVR 200,000 from MVR 50,000 in August 2024, which encouraged more medium-sized payments to move from MRTGS to FAVARA.
Big push on financial inclusion
The MMA launched the National Financial Inclusion Strategy (NFIS) in 2025. This is basically a country-wide roadmap to bring more people into the formal financial system, with a special focus on women, youth, the elderly, and micro, small, and medium enterprises (MSMEs).
Three big initiatives under the inclusion umbrella
- National Sustainable Finance Framework: A new framework to mobilize finance for climate action and sustainable development. It guides banks and finance companies to develop green loans, social bonds, and sustainability-linked products.
- Green Finance Taxonomy: A simple tool that helps banks figure out which economic activities count as “green”. Developed with the Alliance for Financial Inclusion (AFI), the taxonomy will let banks roll out new green loan products. It will be pilot tested with selected financial institutions first.
- Inclusive National Affordable Housing Scheme: A brand-new scheme to help first-time homebuyers in the Greater Malé Region get affordable financing. All MMA-regulated banks now have to set aside a mandatory portion of their loan portfolio for this scheme. The financing is offered as an Islamic finance facility.
Islamic finance got a serious boost in 2025
The MMA made Islamic finance a major priority during the year. Several brand-new initiatives launched alongside ongoing programmes like the Tamweel Islamic Finance Initiative.
Meet MISFI
The Maldives Islamic Social Finance Initiative (MISFI) is one of the most interesting new launches. Think of MISFI as a bridge between people who want to give (donors), the Islamic banks, and the projects that need help (charities, communities, infrastructure projects).
MISFI channels four kinds of Islamic social finance into the formal banking system: Zakat (compulsory alms), Sadaqah (voluntary charity), Waqf (endowments), and Islamic crowdfunding.
Here is a simple example. Imagine you want to donate some Zakat money. Right now you might hand it over to a local mosque or a relative in need. But MISFI lets you donate through your Islamic bank account instead. The bank then channels your donation to approved projects, like wheelchairs for the disabled, education support for poor students, or microfinance for small entrepreneurs.
A pilot project for MISFI was launched in 2205 with participating Islamic Financial Institutions (IFIs). The pilot tests the system before the full rollout.
MIFSAC and Tamweel
The MMA also set up the Maldives Islamic Finance Strategic Advisory Council (MIFSAC). Think of MIFSAC as a panel of senior experts who advise the MMA on how to grow Islamic finance in the country. The council held its first meeting in December 2025.
The Tamweel FinLit Fest 2025 brought Islamic finance education to students, youth, and the wider public. The festival included debates, competitions, and “Ask Me Anything” sessions with the Shari’ah Council of the MMA (SCoMMA).
External sector: dollars in, dollars out
The external sector tracks how money flows between the Maldives and the rest of the world. The big news here is that the current account deficit narrowed sharply, from 17.8% of GDP in 2204 to just 6.2% in 2025.
In simple terms, the country still imports more than it exports, so there is still a gap. But the gap got much smaller. Why? Because tourism receipts surged, fish exports grew, and imports slightly declined.
Where our money came from and went to
The services account, which is mostly tourism, recorded a surplus of USD 4.0 billion. That was driven by USD 5.6 billion in travel receipts.
On the good side, merchandize imports totalled USD 3.0 billion, with Asia accounting for 83% of all imports. The UAE was our biggest single source of imports (18%), followed by India and China (15% each).
Domestic exports (mainly fish) climbed by 56% to USD 144 million. Foreign direct investment inflows hit USD 857.1 million, with new equity coming in from tourism projects.
Foreign reserves climbed to a record
The country’s emergency piggy bank, called gross international reserves (GIR), climbed to USD 984.6 million by the end of 2025. That is sharply up from USD 673.9 million a year earlier. Reserves kept climbing throughout the year and peaked in December.
The MMA collected a total of USD 492.0 million from mandatory foreign currency conversions during the year. That, combined with the RBI swap and stronger tourism inflows, drove the reserves up.
Cash, coins, and quietly digital future
The MMA is the only entity allowed to issue Maldivian currency. The total value of banknotes in circulation hit MVR 4.7 billion by end of 2025, up 12% from the previous year. Coins in circulation reached 92.7 million.
The MMA also reprinted the 100-Rufiyaa banknote and issued it into circulation on January 19, 2025. A shipment of 1 Rufiyaa coins arrived in June 2025.
The MMA also destroyed worn-out banknotes. In 2025, the MMA destroyed 938,033 banknotes worth about MVR 70.7 million. The volume of unit banknotes grew by 80% compared to 2024, mostly because the Ran Dhihafaheh series issued in January 2016 is now aging out.
Fighting financial crime
The Financial Intelligence Unit (FIU) of the MMA leads the fight against money laundering and terrorism financing. In 2025, the FIU launched a new information dissemination portal to securely share intelligence with relevant authorities.
The Maldives also got its Mutual Evaluation Report (MER) 2025 from the Asia/Pacific Group on Money Laundering. The MER measures how well the country meets international standards on AML/CFT. The 2025 report showed notable improvements compared to the previous assessment back in 2011.
The FIU also signed new Memoranda of Understanding (MoUs) with Taiwan and Hong Kong during the year, expanding international cooperation. It conducted on-site examinations of two money remittance providers and one finance leasing company.
Then March 2026 happened and changed everything
Here is where things take a sharp turn. The MMA Annual Report 2025 does not just look backwards. It also looks ahead at 2026, and what it sees is worrying.
On February 28, 2026, war broke out in the Middle East. The Strait of Hormuz closed. Attacks hit energy infrastructure. Global oil prices spiked.
For the Maldives, the damage showed up almost immediately. Most European tourists fly to us through Gulf hubs like Dubai, Doha, and Abu Dhabi. So when those routes got disrupted, our arrivals took a nasty hit.
In March 2026, tourist arrivals dropped by 21% year-on-year. That is a brutal reversal, especially after the strong 10% growth recorded in January and February 2026. Europe and the Middle East got hit hardest.
And the impact was not just on arrivals. The closure of the Strait of Hormuz disrupted global supply chains. Energy prices spiked. The pass-through into domestic production costs and consumer prices is expected to push inflation higher in 2026.
What does 206 actually look like now?
Originally, the MMA and Ministry of Finance and Public Enterprises had projected GDP growth of 4.8% to 5.3% in 2206. That forecast now looks too optimistic. The MMA explicitly says the growth forecast will be revised downwards.
Key risks to watch in 2026
- Current account deficit could widen: The deficit may grow to 7.8% of GDP in 2026 from 6.2% in 2025. Tourism receipts may fall while imports stay expensive.
- Inflation could climb again: Earlier forecasts said inflation would ease to 1.1% in 2026. With higher oil prices and supply chain disruptions, that number will now be revised upwards.
- Reserves may shrink: GIR may drop during the year as the country burns through dollars to cover imports and debt repayments, including a large debt that fell due in April 2026.
- Fiscal deficit could widen: The deficit may grow to 7.1% of GDP in 2026 from the improved 4.1% in 2025. That is a step backwards.
- Public debt projected to climb: Total public debt is projected at 135.9% of GDP in 2025 (under the budget assumptions), declining to 127.6% by end-2026 if refinancing arrangements work out.
So what does all this mean for everyday people?
2025 was a really strong year. The economy grew. Tourism boomed and broke records. Fisheries roared back from disaster. Banks made more money. Foreign reserves climbed to fresh highs. The government’s books looked healthier. Payment systems modernized. New laws strengthened the financial system. Islamic finance got serious institutional support.
But 2026 is shaping up to be much, much harder. The war in the Middle East threatens our tourist arrivals. Higher oil prices threaten the cost of living. A weaker tourism season threatens government revenue. A weaker fiscal position threatens our debt sustainability.
The country still has tools to manage this. The new Foreign Currency Act gives the MMA more control over dollars flowing in and out. The RBI swap line offers a real safety cushion. Tourism diversification efforts continue. Islamic finance is opening up new avenues for inclusive growth.
But honestly? A low now depends on how long this Middle East crisis drags on. The longer it lasts, the harder our 2026 becomes.
Fore now, the MMA Annual Report 2025 tells a story of two halves. A genuinely great year just ended. A genuinely challenging year just started. The next twelve months will test how resilient the Maldivian economy really is.