Moody's says Maldives could face difficulties in obtaining further loans due to debt

In this photo, the building that houses the Finance Ministry of the Maldives and Maldives Inland Revenue Authority is seen. The income for the state from shares owned in companies increased above expectations, according to the Finance Ministry on November 14, 2019. (Sun Photo/Fayaz Moosa)

Credit rating agency Moody's Corporation has stated that due to the increase in the state debt of the Maldives, the nation could face difficulties in obtaining further loan facilities. 

The agency last gave the Maldives a credit rating of B3 which indicates a risky credit or a financially unstable rating. The agency gave a B3A rating for the economic strength indicator of the Maldives. 

Moody's said that the Maldivian economy was not competitive and that while the nation was dependant on tourism, the industry often faced a lot of setbacks due to climate change and natural disasters. 

Moody's also gave a B1 rating for the Fiscal strength of the Maldives due to the increased debt which could lower the available credit facilities available to the Maldives. The agency said that the state balance sheets also showed an increase in debt while also noting the increase in debt with state guarantees.

The agency said that the Maldives could face difficulties in obtaining further financial aid from financial institutions. 

Due to the COVID-19 pandemic, many state institutions obtained loans. Finance Ministry statistics show that in 2020 alone, the Maldives had obtained a total of 18 loans. 

The state debt of the Maldives stood at MVR 86.5 billion by the end of 2020.