Fitch maintains Maldives’ credit rating at ‘CC’ as default risks persist

Top global credit rating agency has maintained Maldives’ credit rating at ‘CC’, citing risk of default persists.

Fitch issues credit ratings that provide forward-looking assessments of an entity's or obligation’s relative capacity to fulfill its financial commitments. ‘CC’ rating indicates very high risk of default.

Fitch downgraded Maldives’ credit rating from ‘CCC+’ to ‘CC’ last year in August. The ranking has now been affirmed following a review.

According to Fitch, Maldives' Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘CC” reflects that a default event of some sort remains probable within the rating horizon.

In this regard, Fitch said it believes persistent external and fiscal vulnerabilities will complicate refinancing of the sovereign's impending large external debt-servicing obligations in the year ahead even as gross foreign exchange reserves have increased following support from the Reserve Bank of India (RBI).

Maldives has to repay USD 688 million for foreign loans this year alone, and MVR 1.1 billion with the next two years.

Fitch underscored that Maldives’ foreign exchange reserves rose to USD 856 million in April 2025, up from a record low of USD 371 million in September 2024. This surge was primarily due to a USD 400 million drawdown from a currency swap agreement between the Maldives Monetary Authority (MMA) and RBI, signed in October 2024, which helped ease immediate external liquidity pressures.

Nevertheless, the credit agency stressed this was insufficient, as Maldives' gross foreign-reserve coverage of current external payments at roughly 1.5 months.  

Moreover, Fitch reported that after factoring in MMA’s redetermined short-term foreign liabilities due within the next 12 months—including the USD swap drawdown with the RBI—net gross reserves remain low at just USD 28 million.

The credit agency forecast Maldives' debt-to-GDP ratio to climb up to 125.1 percent in 2026. 

Fitch has projected Maldives’ economic growth to remain robust at 4.8 percent in 2025 and 4.7 percent in 2026 – primarily driven by rising tourist arrivals and receipts, supported by the partial opening of the new passenger terminal at Velana International Airport, new resorts under construction, and continued development of tourism infrastructure.

To improve the rating, Fitch has urged to increase foreign exchange reserves, cut down expenditure and implement fiscal reforms.

Notably, another global credit rating agency, Moody’s has also affirmed Maldives’ credit rating at Caa2, which had been downgraded in September of last year.

It has been several months since International Monetary Fund (IMF) and World Bank have been urging the Maldivian government to expedite fiscal reforms in light of Maldives’ worsening economic state.

Fitch’s review expresses concern over the fact that despite the government announcing various fiscal reforms, none of them had been implemented due to various reasons.

Despite its high debt burdens, the Maldivian government has affirmed it will not default on any loans. The current administration cited one of its biggest achievements as “saving Maldives from bankruptcy”.