The Maldives’ Velana International Airport is the country’s lifeline. Nearly every visitor — and tourism generates more than a quarter of GDP — passes through its gates. In 2018, officials promised a grand expansion: an $800 million program of new terminals, extended runways, and modern cargo facilities designed to handle millions more visitors each year. For a nation of just 500,000 people hosting 1.8 million tourists in 2023, it looked like a straightforward bet on growth.

Seven years later, that promise remains unfulfilled. Construction has been delayed, costs have ballooned, and political controversy has mounted. With the December–March tourist high season approaching, the stalled project has become more than an inconvenience. It is now a test of the Maldives’ debt model, its governance, and its delicate geopolitical balancing act between Beijing, New Delhi, and the West.

The promise in concrete

The expansion was never just about runways. It was meant as a statement: the Maldives would compete with regional hubs like Colombo and Seychelles, offering seamless arrivals for the luxury travelers who fill its resorts. Tourism already brings in $3–4 billion annually, paying for much of the nation’s import bill. Velana’s upgrade was billed as the single largest infrastructure project in the country’s history, and a showpiece of Chinese financing under the Belt and Road Initiative.

Supporters argued that Beijing was the only partner willing to finance such scale. Critics saw a replay of Sri Lanka’s Hambantota port: a project so large, so leveraged, that debt repayment could one day mean surrendering control of a national asset.

Deadlines missed, costs rising

In July 2025, the government quietly admitted what the public already suspected: the project is behind schedule. Officials spoke vaguely of “technical adjustments” and “supply chain disruptions.” But hoteliers, airlines, and opposition figures point to poor planning, padded contracts, and weak oversight.

Industry sources estimate cost overruns of more than $200 million, pushing the total bill toward $1 billion — almost equivalent to a full year of tourism receipts. The first new facilities are now penciled in for phased completion in 2026, a full eight years after groundbreaking.

Each delay carries weight. Resorts worry about lost bookings if bottlenecks persist. Airlines are hedging by prioritizing Colombo, Dubai, and Seychelles as growth hubs. Miss another December high season, say tourism executives, and the Maldives’ reputation as a seamless luxury destination could suffer lasting damage.

Debt diplomacy, island edition

Behind the construction delays lurks a larger problem: debt. The Maldives’ public debt now exceeds 115% of GDP, or roughly $7.5–8 billion, among the highest ratios in Asia. Servicing that debt consumes over 40% of government revenue, leaving little space for investment or social spending.

Foreign reserves stand at just $600–700 million, a fraction of the debt stock. If repayments on the airport package and other loans climb above $150 million annually, the government will effectively be borrowing just to service existing obligations.

This fragility sharpens scrutiny of the China connection. The Velana project is Beijing’s signature investment in the Maldives, carried out by Chinese contractors with Chinese financing. Critics argue this leaves the country vulnerable if revenue falters. The government counters that Western lenders showed no appetite for projects of this scale, and that without Beijing’s involvement the expansion would never have begun.

Political turbulence

The airport issue now bleeds into politics. With local elections looming in early 2026, the opposition has seized on Velana as a symbol of mismanagement and alleged corruption. Allegations swirl of inflated procurement, crony subcontractors, and padded invoices.

For citizens, the optics are brutal. The government has raised taxes and lifted the pension age, while committing billions in opaque loans. Families feel the squeeze of inflation, even as projects meant to secure the economy’s future stall on the runway.

The regional comparison

The Maldives is not alone in facing the pitfalls of mega-infrastructure. Sri Lanka’s Mattala Rajapaksa International Airport, built with Chinese loans, has been derided as the “world’s emptiest airport” — a white elephant with more staff than passengers. Seychelles, by contrast, has expanded its airport incrementally, matching capacity to demand without overleveraging.

Closer to home, Mauritius competes directly with the Maldives for high-spending tourists. Its Sir Seewoosagur Ramgoolam International Airport underwent a carefully phased expansion, co-financed with European and multilateral partners, avoiding the debt blowouts now haunting Malé. While Mauritius battles its own governance scandals, its airport capacity is in place and ready to serve.

Against this backdrop, Velana’s delays look especially damaging. Each year of stalled construction is not just lost growth — it is market share ceded to rivals in the Indian Ocean.

The four tests ahead

The next year will decide whether Velana becomes a growth catalyst or a cautionary tale.

The first test is delivery. The government promises phased completion in 2026. Miss that, and investor confidence will falter. A December 2026 high season without new capacity would be a credibility collapse.

The second test is debt service. If repayments on the airport package and other external loans push debt service above $150 million annually, the government may face arrears or ratings downgrades. That would make refinancing costlier — a spiral small economies rarely escape.

The third test is China’s role. Should the Maldives struggle to pay, will Beijing restructure terms quietly, or seek greater control over assets? Sri Lanka’s Hambantota port looms as a precedent: a strategic facility turned into collateral.

The fourth test is tourism flows. Arrivals dipped in mid-2025 amid global slowdown. If growth flatlines in 2026, the financing model collapses: fewer dollars in, the same dollars out.

International warnings

Both the IMF and the World Bank have flagged the Maldives’ debt trajectory as unsustainable without major fiscal reform. The IMF’s 2024 Article IV review warned that debt levels left the economy “highly vulnerable to external shocks,” while the World Bank noted that dollar-denominated obligations and thin reserves make even modest repayment slippages dangerous.

The FATF grey-listed the Maldives as recently as 2020 for weaknesses in financial supervision; while the country has since exited, governance missteps at Velana risk reigniting scrutiny from ESAAMLG, the regional anti-money laundering body. For an economy that depends on global banks to process tourist dollars, a reputational downgrade could prove as damaging as any missed construction deadline.

The road ahead

The Velana expansion was supposed to symbolize ambition and self-reliance. Instead, it risks becoming an emblem of dependency. The Maldives’ prosperity depends on turning tourists into hard currency; its sovereignty now depends on whether foreign-financed concrete delivers returns before the debt bill comes due.

The lesson for the wider Indian Ocean is blunt. Infrastructure built on opaque loans and delivered behind schedule can transform from lifeline to liability. The Maldives still has a chance to turn Velana into the gateway of a new era. But time, money, and credibility are running short — and planes full of visitors will not wait forever.