Credit Rating Upgrade Eases Financial Aid Access, Says Finance Minister

Recent upgrades in the Maldives’ sovereign credit ratings will significantly improve access to international capital facilities and bolster economic confidence, Minister of Finance and Public Enterprises Hassan Zareer stated during the tenth episode of the Ahaa public forum.

Highlighting the country’s credit trajectory, Minister Zareer noted that since the Maldives received its initial rating of ‘B+’ in 2016, the assessment steadily declined in subsequent years due to rising public debt and revenue imbalances exacerbated by the COVID-19 pandemic. 

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However, targeted fiscal measures enabled a reversal of this trend in 2026, pushing the country’s rating back up to ‘Caa1’ with a stable outlook, restoring levels last seen in 2021.

Minister Zareer emphasised that the Moody’s upgrade serves as an international endorsement of the administration’s fiscal reforms and debt management strategies over the past two years. Recent engagements with foreign financial institutions following the announcement revealed a distinctly positive shift toward extending credit and financial backing to the state.

The improved rating framework is expected to facilitate the execution of major capital infrastructure projects and streamline bilateral assistance and international borrowing efforts.

Major global rating agencies Fitch and Moody’s have both revised the Maldives’ outlook upward following consistent external debt servicing. In June, Fitch upgraded the country’s rating from ‘CC’ to ‘CCC-‘, while Moody’s raised its assessment from ‘Caa2’ to ‘Caa1’ on 8 October.

The rating agencies attributed the upgrades to a reduction in immediate default risks and eased external repayment pressures. Key debt milestones achieved this year include the settlement of a USD 500 million sovereign sukuk in April, the repayment of two USD 50 million Treasury bills owed to the State Bank of India in May and September, and the settlement of a USD 400 million Indian currency swap. 

Additionally, total national debt servicing reached USD 1.4 billion so far this year, while outstanding government external obligations declined from USD 2.8 billion at the end of 2025 to USD 2.4 billion in the second quarter of 2026.

Despite the rating upgrade, Moody’s noted that the ‘Caa1′ level still reflects underlying fiscal vulnerability. The agency projects the Maldives’ fiscal deficit to widen to between 8.0 and 8.5 per cent of GDP in 2026, with total public debt remaining above 100 per cent of GDP. 

Moody’s highlighted that while foreign exchange regulations and higher tourism tax revenues have bolstered reserves and the Sovereign Development Fund, ongoing risks including, elevated energy costs, high domestic refinancing needs, and weak usable reserve coverage, will test foreign currency inflows in the coming quarters.