International credit rating agency Fitch Ratings has reaffirmed the Maldives’ sovereign credit rating at ‘CC’, citing persistent concerns about high external debt levels and the risk of default in the near term. 

The rating, which Fitch first assigned in August last year, reflects the agency's assessment that the island nation faces “a very high level of credit risk,” primarily due to its substantial debt obligations.

According to Fitch, the Maldives is expected to face foreign debt repayments of USD 688 million in 2025, with this figure projected to climb to USD 1.1 billion in 2026. 

The agency has flagged these obligations as a key source of fiscal vulnerability, raising the possibility of default if financing pressures are not alleviated.

Despite the bleak rating, Fitch acknowledged a number of positive developments in the Maldivian economy. 

The government’s ongoing fiscal reforms, an expanding tourism sector, and strengthened monetary cooperation with India are expected to cushion some of the pressure on the country’s foreign reserves.

Recent reforms under the Foreign Exchange Act have helped boost official reserves, which stood at USD 856.3 million as of April 2025. 

Notably, the strengthening of the currency swap facility between the Reserve Bank of India (RBI) and the Maldives Monetary Authority (MMA) has further bolstered liquidity and provided crucial external support.

The Ministry of Finance responded to Fitch’s rating by highlighting the underlying resilience of the Maldivian economy. 

The Ministry noted that tourism, a key pillar of the country's GDP, has seen a year-on-year growth of 9.4% in tourist arrivals. 

This growth underpins Fitch’s forecast of a 4.8% GDP expansion in 2025, with growth expected to accelerate to 6.0% in 2026 following the commencement of operations at the new Valana International Airport.

Moreover, the government reported a fiscal surplus of MVR 1.1 billion as of June 5th, attributed to increased revenues and tighter expenditure controls. 

New revenue measures, including revisions to airport fees, the green tax, and import duties, have significantly improved government earnings and foreign exchange inflows.

The Ministry further emphasized that the government’s medium-term debt management strategy is geared toward enhancing productivity, attracting investment, and ultimately reducing the debt-to-GDP ratio.

While Fitch remains cautious, the agency recognized the role of tourism-related foreign exchange requirements in driving reserve accumulation. 

The combined effect of these developments suggests that while debt challenges persist, the Maldives has avenues to stabilize and gradually strengthen its financial position.