On 3rd December 2024, Moody’s confirmed the Maldives’ long-term local and foreign currency issuer rating at Caa2, maintaining a negative outlook. The Maldives Ministry of Finance has since issued a statement reaffirming its commitment to addressing fiscal challenges through structural reforms and financial safeguards.
According to the ministry, the government remains focused on enhancing foreign currency liquidity and managing external debt obligations. Measures highlighted in the press release include the implementation of foreign currency regulations by the Maldives Monetary Authority (MMA) and tax reforms designed to boost foreign currency reserves. These steps, the ministry noted, aim to stabilise the financial system amidst persistent external liquidity pressures.
The government’s fiscal strategy also includes planned expenditure cuts, such as subsidy reforms, and collaborative efforts with the private sector to fund key infrastructure projects in renewable energy and housing. The ministry stated that initiatives under the Maldives Economic Reform Agenda are central to alleviating pressures on the fiscal and external sectors while ensuring long-term economic stability.
The recent currency swap agreement with India and adjustments to tax rates for dollar-denominated services, including the Tourism Goods and Services Tax (TGST) increase slated for mid-2025, were cited as positive steps towards building reserves. The ministry further acknowledged Moody’s assessment of heightened external liquidity risks but expressed optimism that ongoing reforms and fiscal consolidation would address these concerns.
While Moody’s continues to warn of the Maldives’ vulnerability to external shocks, the government reaffirmed its commitment to fostering fiscal responsibility, noting that the first Fiscal Responsibility Charter under the newly ratified National Fiscal Responsibility Act would be published in six months. The government also underscored its collaborative efforts with international partners to enhance economic resilience.
With external debt repayments exceeding USD 600 million in 2025 and more than USD 1 billion in 2026, including a USD 500 million sukuk, the Maldives is under pressure to navigate these challenges effectively. The Finance Ministry stressed that reforms are aimed at securing the country’s economic future, even as significant risks remain.
