Moody’s Ratings has affirmed the Government’s long-term local and foreign currency issuer ratings at Caa2 and revised the outlook to stable from negative. It has also affirmed the Caa2 long-term foreign currency backed senior unsecured rating for Maldives Sukuk Issuance Limited, with its outlook similarly changed to stable.

The agency said the shift to a stable outlook reflects easing external liquidity pressures, supported by reforms that have strengthened foreign currency inflows and strong tourism performance.

Moody’s noted that external buffers have recovered markedly over the past year after a significant decline in 2024. As of October 2025, foreign exchange reserves stand at USD 859 million, covering approximately three months of imports, compared to a low of USD 364 million in September 2024. The SDF’s USD cash balance has risen sharply to USD 126 million as of 9 November 2025, up from just USD 15 million a year earlier.

The agency attributed much of this recovery to policy reforms implemented in late 2024. These include increases in dollar-denominated taxes and fees, such as the Tourism Goods and Services Tax and the Airport Development Fee. According to the Maldives Inland Revenue Authority, US dollar revenue for the year up to October 2025 totalled USD 1.2 billion, which is 39 per cent higher than the same period last year.

Moody’s also highlighted regulatory changes requiring tourism operators to convert their dollar earnings into Maldivian rufiyaa, allowing the country to retain more foreign currency. Meanwhile, tourist arrivals have increased by about 10 per cent compared to last year, and the higher TGST rate introduced on 1 July 2025 and the revised Airport Development Fee implemented on 1 December 2024 have further contributed to stronger dollar inflows.

Access to external financing, particularly from India, has also improved. Moody’s cited the rollover of dollar-denominated debt, the USD 400 million currency swap originally due to expire in October, and an additional rupee-denominated credit line worth USD 565 million extended in June. The agency said this continued bilateral support has helped ease external financing risks at a time when global market conditions remain challenging for the Maldives.

In its medium-term budget framework for 2026 to 2028, the Government has set a target to reduce the fiscal deficit to more sustainable levels. Part of this plan involves making regular deposits into the Sovereign Development Fund to reduce the debt-to-GDP ratio and strengthen debt sustainability.

With the initial downgrade to Caa2 weighing on the Maldivian economy, the Government’s reform agenda has helped shift momentum in a positive direction and rebuild economic resilience.