The government’s external debt service is projected at USD 600 to 700 million in 2025 and approximately USD 1 billion in 2026, including the USD 500 million sukuk maturing in April 2026.
The government has acknowledged the risks highlighted by Moody's and reaffirmed its commitment to implementing planned fiscal consolidation measures to mitigate challenges in the fiscal and external sectors.
Global credit rating agency Moody’s has maintained the Maldives’ credit rating at Caa2, acknowledging the government’s ongoing financial and economic reforms aimed at stabilizing the country’s economy.
In September last year, Moody’s downgraded the Maldives’ rating from Caa1 to Caa2, citing heightened default risks due to persistently low foreign exchange reserves and limited prospects for a quick recovery.
However, after the review rating period, Moody’s decided to maintain the rating at Caa2, reflecting improvements in access to bilateral financing, new foreign currency regulation by the Maldives Monetary Authority (MMA), and revenue reforms being implemented by the government.
Moody's stated that the materialization of a substantial currency swap arrangement with India underscores the Maldives' continued access to bilateral financing. Additionally, the introduction of new foreign currency regulations and tax reforms enhances the prospects for accumulating foreign exchange (FX) reserves. These measures, coupled with additional reserves in the Sovereign Development Fund (SDF), provide a buffer to support external debt repayments.
Last September, the Maldives successfully secured external financing through a significant currency swap agreement with India, valued at USD 400 million and INR 30 billion.
However, external liquidity pressures remain elevated due to substantial debt obligations in the next 12 to 18 months. According to Moody's, the government’s external debt service is projected at USD 600 to 700 million in 2025 and approximately USD 1 billion in 2026, including the USD 500 million sukuk maturing in April 2026.
The Finance Ministry has stated that cost-cutting measures outlined in next year's budget, including reforms to the subsidy system and enhanced management of state-owned companies, are aimed at addressing the risks associated with debt repayment.
The statement added that the government is collaborating with the private sector to secure financing to the renewable energy system and reducing fuel consumption.
"Maldives government acknowledges the risks highlighted by Moody's and remains committed to the implementation of fiscal and economic reform measures," Finance Ministry said.
The Ministry said that the implementation of the "Maldives Economic reform Agenda" will enhance economic growth and restore fiscal and debt sustainability.
The total debt is projected to reach MVR 139 billion by the end of this year and is expected to increase further to MVR 150 billion in 2025, equivalent to 124 percent of the country's GDP, the ministry said.
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