Ex-finance minister calls for urgent steps to restore investor confidence

The government needs to implement urgent measures to restore investor confidence, says Ibrahim Ameer, the country’s former finance minister.

The appeal comes after Moody’s downgraded Maldives’ credit rating from ‘CAA1’ to ‘CAA2’ last week, citing an increased risk of default on its external debt obligations. The country has an external debt service obligation of about USD 600 million in 2025 and more than USD 1 billion in 2026.

In a post on X on Sunday afternoon, Ameer accused the government of incompetence.

“It is alarming that the government continues to fail to implement credible and strong policies to improve the state of public finances, which is in disarray due to the sheer incompetence of this government,” he said.

Ameer said the government continues to take one wrong step after the other.

“They have failed to stop high political appointments. The number of political posts, which is in the thousands, has not dropped despite the merger of government companies. Corruption within government companies has increased exponentially. The entire financial system has been fully disrupted in an organized crime sponsored by the government. Businesses have gone bankrupt,” he said.

Ameer said the government needs to implement urgent measures to re-establish financial discipline, strengthen public financial management, and strengthen institutions to restore investor confidence.

“Failure to do so at this time will lead to further economic instability,” he warned.

Ameer blamed the downgrade in Maldives’ credit rating to poor governance and poor institutional capacity.

He said that Moody’s assessment highlights weaknesses in governance, especially in the country’s ability to swiftly adopt measures and mitigate external vulnerability risks.

He said that the assessment shows that despite an increase in tourist arrivals and hikes in tourism-related taxes, the Maldives’ foreign exchange reserve continues to be low, increasing default risks.

Ameer accused the government of lack of fiscal transparency. He said that the decision to stop weekly financial reports creates more questions over the government’s spending and the low reserves.

“This is the time for the government to roll out responsible fiscal policies and prioritize transparency to safeguard our nation’s future,” he said.

In a statement in response to the downgrade in Maldives’ credit rating, the Maldives Monetary Authority (MMA) reaffirmed the capability of the government to meet its external debt obligations, including the external bond repayment in October.

The MMA said that both the gross international reserves and usable reserve has improved, with USD 444 million at the end of August, coming up from USD 395 million at the end of July.

It expects the gross international reserves to surpass the USD 606 million projected in the 2024 budget.

The central bank said that work is underway to reduce the MVR 6.7 billion surplus liquidity in the banking system by utilizing monetary instruments in order to minimize the challenges to maintaining exchange rate stability. The bank is also set to commence open market operations this year to mop-up the surplus liquidity.

The MMA is also set to announce revisions to monetary regulations in September to overcome challenges to the foreign exchange market, which is expected to boost the amount of foreign currency entering the domestic banking system.

“There remains no doubt that the MMA and the Government of the Maldives, together with all related government institutions, will be able to meet all future external debt obligations,” it said.