Fitch maintains Maldives credit rating at ‘CC’

Fitch Ratings has maintained Maldives’ long-term foreign-currency issuer default rating at 'CC', citing little change in foreign exchange reserves and continued economic growth, despite persistent fiscal and external funding challenges.

Fitch projects Maldives economic momentum will remain strong, largely driven by a rise in tourist arrivals and improved tourism infrastructure, including the partial opening of the new passenger terminal at Velana International Airport by July 2025.

“We expect growth to be primarily driven by rising tourist arrivals and receipts, supported by the partial opening of the new passenger terminal at Velana International Airport as early as July 2025, new resorts under construction, and continued development of tourism infrastructure,” Fitch stated.

However, Fitch also warned that the Maldives’ fiscal outlook remains fragile, with severe difficulties in raising external financing. The 'CC' rating shows that a default event of some kind is still possible within the rating horizon.

Fitch projects Maldives economy to grow by 4.8 percent in 2025 and 4.7 percent in 2026. Contributing factors include the government’s push to expand the tourism sector, including new resort developments and the tourism dollar conversion requirement, which mandates tourist facilities to deposit dollar earnings into local banks resulting in boosting official reserves.

The agency noted that the Reserve Bank of India’s currency swap has helped stabilize reserves. Future inflows into the Sovereign Development Fund (SDF), intended to support external debt repayment, were also flagged as key to sustaining confidence.

However, foreign reserve levels remains low. Fitch estimates that the Maldives’ gross foreign-reserve coverage of current external payments stands at around 1.5 months which is well below the three-month benchmark set by the IMF and international financial standards.

The country faces significant debt repayments this year, with USD 688 million (MVR 10.8 billion) in sovereign and publicly guaranteed external debt obligations due in 2025. Of this, USD 356 million (MVR 5.5 billion) must be paid in the first half of the year.

Next year’s repayments total USD 1.1 billion, including USD 500 million in sukuk bonds and USD 100 million in privately issued bonds.

Fitch downgraded Maldives twice last year, first to 'CCC+' in June, and then to 'CC' two months later, over concerns of debt sustainability and external vulnerabilities.