The Ministry of Finance has stated that they will acknowledge and take steps to improve on the issues highlighted by the international credit rating agency Moody’s regarding the Maldives’ financial situation.
In light of the financial reform measures taken by the current government in recent days, Moody’s has maintained the Maldives’ credit rating, acknowledging these measures. Moody’s has given a Caa2 rating. In a statement released today, Moody’s highlighted the significant steps taken to strengthen the country’s financial situation as key factors in maintaining the credit rating. The statement noted that new foreign exchange regulations introduced by the central bank, Maldives Monetary Authority (MMA), and tax reforms implemented by the government are likely to increase foreign exchange reserves.
Moody’s has stated that foreign currency constraints are expected to persist, given the significant external debt servicing requirements over the next 12-18 months. In response, the Finance Ministry released a statement tonight saying that they acknowledge the issues highlighted by Moody’s and assure that the government will take steps to address these issues.
The Ministry also stated that under the government’s economic reform agenda, the economy is expected to expand and the financial situation will improve. They also mentioned that recent changes to foreign exchange regulations are expected to increase foreign currency circulation within the banking system and improve net international reserves. Additionally, the Ministry predicted that foreign currency liquidity will improve with the increase in departure tax and airport development fees.
Moody’s statement also highlighted that the Maldives has achieved success in securing foreign currency financing in recent months. The establishment of a currency swap agreement with India in September 2024, amounting to 400 million US dollars and 30 billion Indian rupees, was cited as an important step in improving the Maldives’ financial situation.
Furthermore, Moody’s projected that foreign exchange reserves would increase with the implementation of the government’s tax rate changes.
