Moody’s upgrades Maldives credit rating to Caa1 with stable outlook
The ministry identified the repayment of a USD 500 million sukuk in April 2026 as one of the factors contributing to the upgrade.
Moody’s Ratings has upgraded the Maldives’ sovereign credit rating from Caa2 to Caa1 with a stable outlook, reflecting a reduction in the risk of the country defaulting on its debt obligations in the near term.
In a statement issued on Thursday, the Ministry of Finance attributed the upgrade to improvements in the country’s debt repayment capacity, foreign exchange reserves and access to external financing.
The ministry identified the repayment of a USD 500 million sukuk in April 2026 as one of the factors contributing to the upgrade.
Other developments cited included the settlement of India’s USD 400 million currency swap facility, the repayment of USD 100 million in Indian Treasury bills in May and September, and the extension of the maturity of a USD 100 million Eurobond to 2031.
According to the ministry, Moody’s also recognised improvements in the Maldives’ foreign exchange reserves and increased deposits into the Sovereign Development Fund (SDF).
The ministry said foreign exchange measures introduced from 2024 had increased foreign currency inflows into the domestic banking system, contributing to higher official reserves and an increase in the SDF balance.
It also said Moody’s had acknowledged the government’s policies and the country’s continued access to financial support from international financial institutions and neighbouring countries.
The ministry stated that financing from international institutions had strengthened the Maldives’ fiscal position and supported its ability to meet financial obligations.
It highlighted USD 40 million in assistance from the World Bank, USD 50 million from the Asian Development Bank (ADB) and USD 40 million from the OPEC Fund for International Development.
The ministry also reported a decline in the government’s debt-to-GDP ratio.
According to its figures, government debt stood at 129.2 per cent of gross domestic product (GDP) at the end of 2025, declining to 122.6 per cent by the end of July 2026.
The ministry said the government would continue to monitor risks arising from instability in the Middle East and rising energy prices, while prioritising essential public services, economic activity and expenditure management.
“The government’s priorities are to protect the essential needs of the public, support economic activity and maintain public expenditure within the budget, while remaining attentive to potential challenges arising from instability in the Middle East and rising energy prices,” the ministry said.
The Moody’s upgrade follows a similar revision by Fitch Ratings in June 2026, when the agency raised the Maldives’ sovereign credit rating from CC to CCC-.
The latest upgrade indicates an improvement in the Maldives’ near-term credit risk assessment, although the Caa1 rating remains within Moody’s speculative-grade category, reflecting continued exposure to substantial credit risk.
