Moody’s Investors Service has affirmed the Maldives’ long-term issuer rating at Caa2 following its latest periodic review, citing ongoing debt vulnerabilities despite signs of economic recovery.
The rating decision follows a committee meeting held on May 8. Moody’s noted that while the country’s economy was severely impacted by the COVID-19 pandemic, particularly due to disruptions in tourism, there has been a notable rebound in the sector accompanied by positive macroeconomic developments.
The review highlights improvements in foreign currency reserves since October 2024, supported by assistance from international financial institutions, reforms in currency policy, and new revenue measures targeting foreign exchange.
However, Moody’s flagged the country’s external debt obligations—especially the upcoming $500 million sukuk maturing in 2026—as the primary risk to the economy. It also underscored challenges in securing financing from global markets, compounded by uncertainties in U.S. monetary policy.
Despite the rating affirmation, the outlook remains cautious due to elevated debt levels and fiscal pressures.