Moody’s has reaffirmed the Maldives’ credit rating at ‘Caa2’, recognizing the government’s commitment to fiscal reform amid ongoing economic challenges.

The global credit rating agency issued the update following a rating committee meeting held on 8 May to reassess the nation’s credit standing in light of recent developments.

The decision comes after Moody’s downgraded the Maldives’ rating from ‘Caa1’ to ‘Caa2’ in September 2023.

Despite heightened risks associated with foreign debt obligations, the agency chose not to pursue a further downgrade, citing the government’s progress in implementing key economic and fiscal reforms.

Moody’s highlighted that the Maldivian economy, which suffered a severe contraction due to the COVID-19 pandemic’s impact on tourism, has shown signs of robust recovery.

The rebound in tourism has supported strong economic growth and underscored the country’s long-term potential and competitive position in the global tourism market.

The agency also noted that since October 2024, foreign exchange reserves have gradually improved, aided by external financing and foreign exchange policy adjustments.

However, Moody’s flagged the large volume of maturing external debt as a continuing credit risk.

In addition, the agency expressed concern over the impact of volatile global market conditions, particularly uncertainty surrounding US economic policy, on the Maldives’ ability to secure financing from international markets and bilateral or private creditors.

Despite these challenges, the Maldivian government maintains that the country continues to meet its debt obligations in a timely manner.

Authorities confirmed that a USD 100 million foreign loan was fully repaid in March this year.