India Welcomes Fitch’s Reaffirmation of Maldives’ Credit Rating, Highlights Currency Swap Support
President Dr Mohamed Muizzu of the Maldives (L) and Prime Minister of India, Narendra Modi on October 8, 2024, exchanging virtual agreements between Maldives and India | Photo: President’s Office
India welcomed Fitch Ratings’ recent reaffirmation of the Maldives’ sovereign credit rating, emphasising that the USD 400 million currency swap between the Reserve Bank of India (RBI) and the Maldives Monetary Authority (MMA) in October 2024 played a crucial role in boosting the Maldives’ foreign exchange reserves.
In a statement, the Indian High Commission in Malé highlighted the impact of the swap arrangement in alleviating short-term external liquidity pressures—a key factor cited by Fitch in its analysis.
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“India notes with satisfaction that the FX reserves increase in Maldives was driven by the $400 million drawdown under a currency swap between MMA and RBI in Oct 24, which alleviated imminent external liquidity strains as noted by Fitch credit rating for Maldives,” the High Commission stated on X today.
India notes with satisfaction that the FX reserves increase in Maldives was driven by the $400 million drawdown under a currency swap between MMA & RBI in Oct 24, which alleviated imminent external liquidity strains as noted by Fitch credit rating for Maldives. pic.twitter.com/VQN2FFG2AL— India in Maldives (@HCIMaldives) June 14, 2025
On 12 June 2025, Fitch Ratings reaffirmed the Maldives’ Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘CC’, cautioning that a sovereign default remains likely due to continued fiscal and external vulnerabilities.
Although tourism earnings have increased and reserves have grown, thanks largely to the currency swap with India, Fitch warned that the Maldives still faces significant risks. The country must meet external debt repayments of USD 688 million in the second half of 2025, escalating to USD 1.1 billion in 2026, while gross reserves stand at only USD 856 million, covering just 1.5 months of external payments.
The Ministry of Finance and Planning pointed to ongoing policy reforms and a robust tourism sector as signs of economic resilience. It projected GDP growth of 4.8 percent in 2025, increasing to 6.0 percent in 2026 with the full operationalisation of Velana International Airport.
However, net reserves remain critically low at USD 28 million, and both the fiscal deficit and public debt continue to rise. Public debt is expected to reach 125.1 percent of GDP by 2026, with Fitch stressing the need for support from external partners such as the IMF and the implementation of credible fiscal reforms to avoid further deterioration in the credit outlook.
Fitch stated that an upgrade would require a sustained increase in reserves and tangible progress on reforms, while any missed debt repayments or steps towards debt restructuring could result in a downgrade of the rating.
