Minister assures continuation of policies that led to credit outlook improvement

Finance Minister Moosa Zameer today assured that the government will remain committed to the robust fiscal policies and measures that were credited for the world's largest credit rating agency, Moody's, maintaining the Maldives' credit rating at CAA2 while upgrading the outlook from "Negative" to "Stable."

Moody's stated that the upgrade in the Maldives' credit rating outlook to "Stable" is a result of the positive outcomes from the sound policies and measures implemented over the past year, as well as those currently being executed. This also reflects the positive results emerging from the strategic efforts to enhance the country's capacity to service its debt.

In a post on X regarding the change, Minister Zameer stated that improving external liquidity, increasing dollar revenue, strengthening the Sovereign Development Fund (SDF), and responsible budget management have helped alleviate external pressures and restore confidence in the economic direction.

"Our goal is to bring sustainable progress to the Maldives through improving our financial and fiscal health, consolidation, and responsible debt management," he said.

The Ministry of Finance explained that the recent improvement in the Maldives' credit rating, as per Moody's statement, is attributed to enhancements in the macro-fiscal situation due to effective fiscal and monetary policies. Key measures included the revision of Airport Tax, Green Tax, and TGST rates to boost foreign currency revenue, resulting in improved reserves and liquidity.

Moody's noted a surge in the foreign currency balance in the Sovereign Development Fund from USD 15 million to USD 126 million while acknowledging government efforts to control budget expenditures.

Despite the optimistic credit outlook, concerns were raised regarding substantial upcoming debt repayments and an increase in short-term domestic debt, which now accounts for 40 percent of GDP, alongside the growing circulation of Maldivian Rufiyaa relative to foreign currency.