Moody's Maintains Maldives’ Caa2 Rating, Highlights Progress in Economic Reforms

Moody’s Investors Service has confirmed and maintained the Maldives’ long-term local and foreign currency issuer rating at Caa2, citing progress in economic reforms and measures to strengthen fiscal and external resilience.

This rating reflects Moody’s recognition of the Maldives' ongoing access to bilateral financing, recent foreign currency regulatory adjustments by the Maldives Monetary Authority (MMA), and the Government’s revenue reforms.

The new foreign currency regulation by the MMA is expected to enhance foreign currency liquidity by increasing its circulation within the domestic banking system and improving net international reserves. Concurrently, adjustments to taxes and fees denominated in foreign currencies are projected to bolster foreign currency liquidity further.

The 2025 budget includes critical expenditure reduction measures, such as reforms to subsidies and the operational efficiency of State-Owned Enterprises, aimed at addressing the Maldives’ fiscal and external deficits. Alongside revenue mobilization efforts, the Government is collaborating with the private sector on innovative financing solutions for public investment projects, including renewable energy and housing.

Planned large-scale investments in renewable energy and the implementation of a fuel hedging policy are expected to alleviate external sector pressures in the medium term.

The Government has acknowledged the risks highlighted in Moody's assessment but reaffirmed its commitment to implementing fiscal consolidation measures. Through the Maldives Economic Reform Agenda, the Government aims to drive economic growth while restoring fiscal and debt sustainability.