Moody’s maintains Maldives credit rating in review
The review notes that economic activity has remained stable, supported by the recovery of the tourism sector.
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Moody’s Ratings on Thursday published the findings of its latest review of the Maldives’ credit status, following an evaluation conducted this month.
The report does not constitute a formal credit rating decision but provides an assessment that will inform the next rating action scheduled for later this year.
Moody’s has maintained the Maldives’ long-term issuer rating at Caa2, with a negative outlook. This rating reflects a high risk of default, although the country has not yet entered into default.
The review cites the government's recent measures to tighten foreign exchange regulations as the main reason for retaining the current rating. According to Moody’s, these regulatory changes have contributed to a gradual improvement in the country’s foreign exchange reserves.
Moody’s observed that although the reserves remain limited, their growth is primarily attributed to policies requiring resorts to channel their foreign currency earnings through the formal financial system.
Despite this improvement, Moody’s expressed concern about the Maldives' ability to secure adequate financing for upcoming external debt repayments. The country faces significant debt servicing obligations, including a USD 500 million sukuk due in 2026.
The review notes that economic activity has remained stable, supported by the recovery of the tourism sector. However, Moody’s cautions that shifts in global market conditions, especially those linked to United States monetary policy, may restrict the Maldives’ access to international financial markets.
To improve the country’s credit standing, Moody’s recommends several measures, including the implementation of fiscal reforms, the strengthening and maintenance of foreign exchange reserves, and the assurance of adequate financing to meet government spending and debt obligations.
The agency also identified potential factors that could trigger a downgrade in the future. These include challenges in accessing external financing, failure to generate additional foreign exchange, and delays in expenditure reduction and fiscal consolidation efforts.
Moody’s concluded that while domestic economic performance remains steady, foreign exchange reserves and external debt repayment capacity remain key vulnerabilities that require prompt and sustained policy attention.
