Moody's ratings agency on Tuesday maintained Maldives' credit rating at Caa2 with a negative outlook.
According to Moody's, the rating was maintained at Caa2 because the government has had some success in obtaining external financing.
"The materialization of a sizeable currency swap arrangement with India reflects continued access to bilateral financing, while introduction of new foreign currency regulations and tax reforms improves the prospects for an accumulation in foreign exchange (FX) reserves, with additional reserves in the Sovereign Development Fund (SDF) available to support external debt repayments," the agency said.
But the negative outlook reflects still heightened external liquidity risks, Moody's said.
"FX reserves remain very low in lieu of substantial external debt obligations over the next 12-18 months. Large twin deficits and excess domestic liquidity will continue to put pressure on limited reserves," they stated.
"Despite the introduction of substantial reforms, implementation and efficacy of these measures in mitigating such pressure – in time to comfortably address sizeable external liquidity needs – remain uncertain."
Moody's said Maldives is expected to struggle in securing bilateral and multilateral financing to shore up external buffers due to the lack of a comprehensive financing package.
The biggest concern highlighted by the agency was the USD 700 million debt owed in 2025 and the USD 1 billion debt owed in 2026. They also raised concerns about the high state budget for 2025 despite cost-cutting measures.
In a statement, the Finance Ministry said the government acknowledges the risks highlighted by Moody's and remains committed to the implementation of the planned fiscal consolidation measures.
