Moody's has changed the credit rating of the Maldives to CAA2, reflecting concerns over the country's growing debt levels.
Moody's, a private financial ratings agency, adjusted the rating from CAA1 to CAA2, citing the significant rise in debt in recent years. The former government’s printing of USD 519 million led to increased demand for foreign currency, making it challenging to maintain a stable exchange rate.
The current government, however, has acknowledged the issues raised in Moody’s report and is taking steps to address them. To improve the management of state-owned enterprises, the government has merged some companies and liquidated those operating at a loss. These measures have already started to positively affect the nation's reserves. The central bank has also expressed optimism, stating that these initiatives are likely to lead to further economic improvement and enhance reserve stability.
Both official and usable reserves in the Maldives are on an upward trend. A total reserves stood at USD 444 million, up from USD 395 million in July by the end of last month. Usable reserves also saw an increase, reaching USD 61.22 million. The Ministry of Finance and the Maldives Monetary Authority (MMA) have finalised technical work for a foreign currency swap arrangement with a friendly nation, as part of ongoing efforts to strengthen reserves. The government is also developing and implementing fiscal policies aimed at curbing public expenditure.