Moody's has maintained its credit rating for Maldives

Moody's Ratings has maintained its credit rating at CAA2, which was given to Maldives in September, following an evaluation marking no significant change in the country's economic situation.

In the periodic review Moody's said a review was conducted through a rating committee held on 8 May 2025 in which they reassessed the appropriateness of the previous rating based on recent developments.

However, this is not a credit rating announcement nor an indication of whether or not a credit rating action is likely in the near future.

"Despite a gradual uptick in foreign exchange reserves observed since October 2024, driven by external financing support and the implementation of foreign exchange reforms, the impending maturity of sizeable external debt obligations remains a significant credit concern for Maldives," the review said.

"Volatile market sentiment, stemming from uncertain US economic policy, will further challenge Maldives' ability to access international markets and secure financing from bilateral and private creditors to either refinance or repay these debts."

The review said access to external financing is crucial to mitigate external liquidity risks, as foreign exchange reserves continue to be eroded by wide current account deficits, despite the recent decline in fuel import prices.

"While stronger foreign currency revenue generation through reforms and reductions in capital spending year-to-date could alleviate external financing needs, it is essential in our assessment of default risk to demonstrate that upcoming external debt obligations, such as the USD 500 million sukuk maturing in 2026, will be reliably and comfortably repaid or refinanced."

Moody's noted this following an earlier World Bank report last month that the Reserve Bank of India's currency swap would bring the government's debt to USD 1 billion this year. Next year, that figure will reach USD 1.1 billion.

Despite previous recommendations, the Maldivian government has decided not to implement 90 percent of the budget cuts. Among them, fuel, electricity, basic food and sewerage targets have been stopped as direct subsidies.

The government has also decided to cancel the targeting of beneficiaries and double pensions. They have also decided to cancel the targeting of the basic elderly pension for those above the age of 65.