One of the largest global credit rating agencies, Fitch Ratings, has downgraded the Maldives' rating this year to CCC+ rating.
One of the largest global credit rating agencies, Fitch Ratings, has downgraded the Maldives' rating this year to CCC+ rating.
Earlier, Maldives had been downgraded to CCC rating during the Covid-19 pandemic. However, for the past three years, Maldives has maintained B- rating.
The agency decreased the rating due to the downward trend in the Maldives' economy and increase in foreign debts, together with the low foreign reserves.
While Fitch Ratings project that the incumbent government will decrease foreign loans, they add that Maldives faces significant challenges in debt repayment in 2025 and 2026. While MVR 9 billion needs to be repaid next year, the amount is at MVR 15 billion for 2026.
The statement says that current account deficit has increased from USD 492 million (MVR 7.5 billion) to USD 748 million (MVR 12 billion). Additionally, the short term foreign liabilities of the foreign reserve have gone down to USD 73 million (MVR 1.1 billion).
It goes on to read that while Maldives will seek foreign assistance in debt repayment owing to the current economic situation, the country's Sovereign Development Fund (SDF) has a small amount in comparison to the loans that require repayment.
While the total figures of the SDF are at MVR 8 billion, only USD 54 million is available as cash balance. A large part of the fund has been invested in T-bills due to the Covid 19 pandemic, and hence cannot be used in the repayment of debts.
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