Editor’s Note: This article is part of South Asian Voices’ annual Year in Review series. Browse the full series page here.
The year 2025 has been transformative for the Maldives, marked by a complex interplay of domestic political turbulence, strategic foreign partnerships, and mounting economic pressures. President Mohamed Muizzu’s administration consolidated political power while simultaneously pursuing ambitious defense modernization and infrastructure projects. At the same time, persistent USD liquidity shortages, rising debt obligations, and abandoned fiscal reforms strained economic governance.
This analysis reflects on the year gone by and examines how these developments will shape the Maldives’ domestic and foreign policy trajectory in 2026 and beyond.
Political Landscape and Domestic Governance
Domestic politics in 2025 have been characterized by authoritarian consolidation, institutional centralization, and heightened tensions with civil society. The administration’s actions against independent media, constraints on freedom of assembly, and assertive control over state institutions—including the judiciary, independent offices like the chief prosecutor, and oversight bodies—have drawn international scrutiny. While the government justifies such measures as helping to uphold institutional integrity, combatting misinformation and defamation, and preventing destabilizing political activity, these measures have, in turn, catalyzed protests, reflecting public discontent over governance and economic management. These protests suggest that domestic grievances—particularly over transparency, accountability, and economic inequality—remain salient drivers of political instability.
The government’s approach to managing dissent while pursuing its strategic policy objectives—namely infrastructure expansion, digital transformation, and national security consolidation—will directly influence both political legitimacy and international engagement. Prolonged unrest threatens investor confidence, constrains development initiatives, and complicates relations with multilateral institutions. In addition, attempts to contain domestic opposition without addressing underlying grievances risk creating a cycle of discontent that may destabilize long-term governance structures.
Defense and Strategic Posture
The Maldives’ security architecture has undergone significant transformation in 2025. President Muizzu’s administration actively diversified defense partnerships, balancing relations with regional powers while enhancing maritime and aerial capabilities.
India remains a cornerstone of Maldives’ strategic security, providing technical support, training, and equipment. However, the Türkiye-donated CGS Dharumavantha, a Doğan-class fast attack craft, has superseded the Indian-donated CGS Huravee as the largest patrol vessel in the Maldivian Coast Guard. The Doğan-class vessel, previously known as TCG Volkan, is equipped with surface defense guns, air defense capabilities, and advanced navigational systems.
The Maldives National Defense Force (MNDF) established its Air Corps in 2024 with a fleet of Türkiye-manufactured Bayraktar TB-2 drones. This year, the MNDF established its first dedicated Air Station in the southernmost territory of the Maldives, consolidating aerial maritime surveillance and patrolling into the country’s own defense capabilities. In addition, the MNDF received armored Ajban 4×4 vehicles from the United Arab Emirates. These developments are further complemented by Australia’s pledge of a Guardian-class patrol boat, which would strengthen the Maldives’ ability to conduct maritime surveillance, search and rescue, and interdiction operations across its exclusive economic zone.
Strategically, these developments reflect the ways in which the Maldives is increasingly exercising a growing agency in regional security. By expanding defense cooperation with India, Turkey, and Australia—including through training, capacity building, and new platforms—the Maldives is positioning itself as a capable small state intending to take a greater role in Indian Ocean regional security dynamics. Its geographic location along critical shipping lanes, particularly the Eight Degree Channel, enhances its leverage in regional dialogues on maritime security coordination and the protection of Indian Ocean trade routes.
The interplay between governance, public sentiment, and development outcomes remains critical. At the same time, ongoing infrastructure projects and strategic partnerships offer an opportunity to bolster economic resilience.
Economic and Development Considerations
Economic policy in 2025 has been dominated by large-scale infrastructure projects, debt pressures, and liquidity constraints. Indian investment has been central, funding transformative project such as the Thilamalé Bridge, which will connect multiple population centers in the capital city region, and two new international airport developments, one of which was inaugurated in November, to facilitate tourism and connectivity in the north and south of Maldives.
Meanwhile, Chinese engagement is now largely limited to trade and the implications of the Free Trade Agreement, as opposed to new large-scale infrastructure projects. While this provides some opportunities for commerce, it also carries risks such as potential revenue losses and trade imbalances. The shifts in import-export dynamics could also complicate fiscal planning and constrain the government’s ability to fund domestic priorities.
Domestic fiscal management has been fraught with challenges. Reliance on bond issuances to finance public spending, combined with perceptions of wasteful expenditure and the abandonment of planned fiscal reforms, has contributed to rising public debt. Intervention in the central bank, coupled with unconventional measures such as quantitative easing, has exacerbated inflationary pressures. While these measures may temporarily alleviate immediate pressures, they heighten both risks of inflation and local currency instability.
The Maldives also faces a persistent shortage of U.S. dollars that has strained trade and liquidity and complicated debt servicing and import payments, among many other functions. With significant debt obligations scheduled for 2026, these dynamics pose a critical test for the government’s capacity to maintain fiscal sustainability.
The interplay between governance, public sentiment, and development outcomes remains critical. At the same time, ongoing infrastructure projects and strategic partnerships offer an opportunity to bolster economic resilience. However, the challenge for the Maldives in 2026 will be to manage fiscal discipline and renew institutional credibility.
Foreign Policy Balancing
Maldives’ foreign policy in 2025 was characterized by active engagement with a wide range of partners, aiming to maximize benefits without falling into overt alignment. India remained a central pillar: Prime Minister Modi’s visit to the Maldives in July reaffirmed New Delhi’s primacy, with renewed commitments on maritime surveillance, defense infrastructure, and economic support.
Parallel to this, President Muizzu continued engage China actively. His participation in the Shanghai Cooperation Organization Summit on the invitation of President Xi Jinping and the signing of multiple MoUs with China reflected both the maintenance of ongoing diplomatic ties and the strengthening of cooperation in areas such as capacity-building and infrastructure development. Engagements began with ASEAN nations like Singapore and Malaysia, focusing on economic diversification, renewable energy, and investment. These ties signaled the Maldives’ intention to broaden its economic relationships within Asia, extending beyond the traditional India-China axis.
A notable shift in foreign policy this year—in addition to the previously-mentioned defense cooperation with Australia—was cooperation in digital governance. Muizzu’s “historic visit” to Estonia this year marked the beginning of a new partnership aimed at supporting the administration’s “Maldives 2.0” digital transformation agenda. Estonia, globally recognized for its e-governance, agreed to provide technical support on digital public services, cybersecurity, and state modernization.
Multilaterally, the Maldives remained an assertive voice for Small Islands Developing States (SIDS), advocating climate finance, ocean governance, and equitable adaptation mechanisms. At the United Nations General Assembly and United Nation’s Human Rights Council this year, Maldives took on Vice Presidential roles. The country also balanced domestic political sensitivities in its engagements with strong normative positions, including outspoken criticism of Israeli actions in Gaza.
The administration has attempted to project strength through rapid military expansion, high-profile foreign engagements, and transformative infrastructure pledges. Yet these efforts coexist with an unprecedented erosion of democratic institutions, shrinking civic space, and political interference that undermines public trust.
Looking Ahead: 2026 and Beyond
As the Maldives moves into 2026, the contradictions at the heart of President Muizzu’s governance model have become increasingly stark. The administration has attempted to project strength through rapid military expansion, high-profile foreign engagements, and transformative infrastructure pledges. Yet these efforts coexist with an unprecedented erosion of democratic institutions, shrinking civic space, and political interference that undermines public trust. The government’s tightening control over the judiciary, media, and independent oversight bodies has accelerated democratic decay, raising concerns not only for domestic stability, but also the credibility of the state in external partnerships. Partners from the West, such as the European Union, the United States, and the United Kingdom have all voiced concern about the diminishing democratic space in the Maldives; however, key regional partners like India and China have maintained a diplomatic silence.
These governance failures directly intersect with the country’s worsening economic outlook. Liquidity shortages, undisciplined public spending, and delayed fiscal reforms may collectively weaken investor confidence. Further downgrades of the Maldives’ credit rating remain a looming risk, and international partners may become increasingly reluctant to extend favorable financing or debt restructuring unless fiscal transparency and institutional independence improve.
Even with new diplomatic openings, the Maldives’ ability to convert external engagement into sustainable gains will depend on restoring economic discipline and institutional reliability. While new defense assets enhanced maritime security, they do little to ease the economic pressure felt by ordinary Maldivians who face a cost-of-living crisis and have low confidence in governance.
The challenge for 2026 is clear: without restoring transparency, integrity, and fiscal discipline, the Maldives’ strategic aspirations will be undermined from within, leaving the population to bear the cost of a governance model that prioritizes projection over stability.
Views expressed are the author’s own and do not necessarily reflect the positions of South Asian Voices, the Stimson Center, or our supporters.
Also Read: How the Maldives Can Navigate Successfully Between India and China
***
Image 1: The President’s Office, Republic of Maldives via Wikimedia
Image 2: The President’s Office, Republic of Maldives via Wikimedia
