Global credit rating agency, Moody’s Ratings has confirmed and maintained the Maldives’ Long-Term Local and Foreign Currency Issuer Rating of “CAA2”.
Earlier in September, Moody’s downgraded the Maldives’ rating from “CAA1” to “CAA2” due to concerns over foreign exchange reserves, trade and budget deficits, and delays in implementing fiscal reforms. The agency placed the rating under review for downgrade.
However, on December 3, Moody’s decided to maintain the September rating of CAA2. The rating reflects Moody’s assessment regarding the country’s continued access to bilateral financing, the introduction of the new foreign currency regulations introduced by the central bank, and the revenue reforms being implemented by the government during this period.
In their review, Moody’s highlighted the Maldives government’s successful efforts in securing foreign currency financing in recent months. The agency specifically noted a US$ 400 million and Rs 30 billion foreign currency swap facility with the Reserve Bank of India in September this year, which helped ease pressures on the country’s external reserves. It also noted that adjustments to the rates of taxes and fees denominated in foreign currency are also projected to improve foreign currency liquidity.
Despite these improvements, the Maldives government still faces significant obstacles, with Moody’s noting that the Maldives has to pay a significant sum for loan repayment over the next 12 to 18 months. Therefore, the challenges in obtaining foreign currency are expected to persist, the review said.
Moody’s underscored that the maintenance or the improvement of the Maldives’ current credit rating depends heavily on how successful the government is in obtaining foreign currency, and the successful implementation of the fiscal reforms included in the 2025 budget.
