Moody’s Ratings has maintained the Maldives’ long-term issuer rating at CAA2, reflecting cautious optimism in the country’s economic recovery, despite ongoing fiscal vulnerabilities and external debt pressures.

In its latest periodic review, released following a ratings committee meeting held on 8 May, Moody’s acknowledged that while the Maldives faced significant economic setbacks due to the COVID-19 pandemic, particularly within its tourism-dependent economy, the sector has shown strong signs of recovery. The revival of tourism, according to the agency, signals growing competitiveness and renewed economic momentum.

The report noted that foreign exchange reserves have been steadily increasing since October 2024. This improvement is attributed to support from foreign financial institutions, policy reforms related to foreign exchange, and the implementation of strategies to boost foreign currency revenue.

Despite these gains, Moody’s highlighted persistent risks, particularly in meeting external debt obligations. A major concern is the USD 500 million sukuk due in 2026. The agency also flagged the Maldives' limited access to international financial markets and rising borrowing costs linked to global economic uncertainties, especially those stemming from U.S. policy shifts.

While maintaining its credit rating, Moody’s recognised the government's continued efforts to manage debt. In March 2025, the Maldives repaid a USD 100 million foreign loan. According to Government data, MVR 2.5 billion has been allocated for debt servicing so far this year.

The Sovereign Development Fund, which stood at USD 2 million when the current Administration took office, has since grown to USD 121 million. Authorities state that this increase was achieved through consistent debt repayments and improved fiscal discipline.

Moody’s decision to maintain the CAA2 rating indicates a balanced view, acknowledging signs of economic recovery while underlining the critical need for sustained fiscal reforms and prudent debt management.