ISTANBUL

The Maldives said Thursday that its first Islamic bond, worth about $500 million, has been successfully settled despite the Middle East war's impact on the economy.

The archipelago country repaid the $500 million principal along with a $24.68 million coupon, the Finance and Planning Ministry said in a statement.

The ministry said the settlement had allowed the Maldives to reduce its debt stock.

The sharia-compliant bond, or sukuk, was issued in 2021 and matured this month.

"Following the COVID-19 pandemic and the external shock from the Russia-Ukraine war in 2022, the Maldives faced a severe deterioration of the fiscal and external sector position," the statement said, adding that the government implemented revenue-enhancing measures in 2024 to address the situation.

The Maldives had projected 5.3% GDP growth for 2026, but Middle East tensions and spillovers to global energy and commodity markets are expected to weigh on medium-term growth and the macro-fiscal outlook, the statement also said, adding that authorities remain confident about ensuring fuel supply and uninterrupted public services.

The sukuk was the world’s first Islamic bond at the time of its issuance.