The government has requested the Vitol Group for a USD 70 million (MVR 1 billion) loan as the country's financial situation deteriorates.

Vitol Group is contracted to import oil sold by the State Trading Organization (STO) and is collaborating with STO to provide bunkering service in the north of the Maldives.

An official with information on the matter told Adhadhu that the government is seeking a loan from Vitol Group because it could not get a loan from financial institutions due to the downgrading of the country's credit rating by Fitch and Moody's.

"That is why they had to go to private businesses," the official said.

The official said the loan is being taken to increase the government's reserves and credit rating.

Moody's downgraded Maldives' credit rating to Caa1 days after Fitch downgraded the rating to "CC".

Moody's downgraded Maldives to Caa1 because of high credit risk. This means Moody's rating is now at "non-investment" grade.

Rising public debt and difficulties securing external financing were the main reasons cited by Fitch for their rating downgrade.

Adhadhu understands that Vitol wants to issue the loan with a three-year repayment period. But the government has proposed to extend the repayment period.

An official said the loan would be issued with an interest rate of more than 11 percent and a high amount to be repaid as success fees.

The state's usable reserves stood at USD 61 million at the end of August, according to the Maldives Monetary Authority (MMA) statistics.