Global credit rating agency, Moody’s has revised Maldives’ credit ranking to CAA2.  As per a statement issued by the credit rating agency, default risks have risen, as foreign exchange reserves – even inclusive of assets held in the Sovereign Development Fund – have remained low with prospects for a sharp recovery relatively dim. It was stressed that Maldives’ reserves remain significantly below the government’s external debt service of around USD 600 to 700 million in 2025, and over a billion in 2026. The agency stated that large twin deficits in the Maldivian economy compound pressures on reserves while implementation of much needed fiscal reforms continue to see delays. Moody’s also highlighted Maldives’ governance weaknesses, especially in the country’s ability to swiftly adopt measures and mitigate external vulnerability risks, and also touched on the country’s limited capacity to reduce excess domestic liquidity.

Last July, Moody’s maintained Maldives’ credit rating at CAA1 as issued in October 2021. However, this rating dropped owing to the snowballing debt Maldives has accumulated over the years, the USD 600 million debt to be repaid next year, and the USD one billion to be cleared in 2026. In last three months, Fitch has downgraded Maldives twice already. Maldives official reserves currently stand at USD 444 million, with usable reserves only at USD 61 million, which is about just enough for one month’s worth of imports.