Moody’s Revises Maldives Outlook to Stable Amid Improved Fiscal Reforms

Moody’s Ratings has revised the Maldives’ rating outlook to stable from negative while affirming the country’s long-term local and foreign currency issuer ratings at Caa2, citing strengthened foreign currency liquidity, improved fiscal discipline and renewed confidence in the government’s ability to access external financing through bilateral partners.

In a press release issued on November 27, 2025, the international rating agency said the decision reflects a marked improvement in the Maldives’ external sector position, underpinned by structural reforms to fiscal and monetary policies and sustained resilience in the domestic economy. Moody’s noted that these developments signal a shift toward greater stability, particularly in the management of foreign currency inflows and overall macroeconomic performance.

The agency highlighted a significant improvement in foreign currency reserves, which rose from USD 616 million in November 2024 to USD 866 million as of October 2025. According to Moody’s, this increase is not temporary but structural in nature, resulting directly from government-led reforms aimed at strengthening revenue collection and regulating foreign currency flows more effectively.

Key among these measures were revisions to major foreign currency-denominated taxes and fees introduced from December 2024. These included increases in Airport Taxes and Fees, the Green Tax and the Tourism Goods and Services Tax. Moody’s also pointed to the enactment of the Foreign Currency Act and related regulations, which were designed to address longstanding challenges in capturing foreign currency transactions conducted outside the domestic banking system. These reforms have enabled the Maldives Monetary Authority to better support the financial sector’s foreign currency requirements, reinforcing liquidity across the system.

Further strengthening the country’s fiscal position, Moody’s noted a sharp rise in the Sovereign Development Fund’s available cash balance, which increased from USD 15 million last year to USD 126 million as of November 9, 2025. This growth was attributed largely to the hike in Airport Development Fees, which are deposited directly into the fund, alongside foreign currency revenues that have exceeded USD 1 billion year-to-date.

Despite global economic uncertainties, Maldives’ economy continues to demonstrate resilience, driven primarily by robust growth in the tourism sector. Moody’s acknowledged that this sector remains the backbone of foreign exchange earnings and a crucial driver of government revenue, contributing positively to the country’s broader fiscal consolidation efforts.

The rating agency also underscored the government’s ongoing engagement with bilateral development partners as a vital factor in sustaining access to foreign financing. Recent actions, including the rollover of foreign currency debt and the activation of a currency swap facility, were highlighted as evidence of Maldives’ capability to manage its external obligations. These measures are particularly relevant as the government prepares to meet medium-term financing requirements, including the USD 500 million sukuk maturing in 2026.

Moody’s said the stable outlook reflects confidence in the government’s continued commitment to fiscal consolidation, prudent macroeconomic management and strict control over expenditure, particularly in relation to capital spending. While fiscal pressures remain, the agency noted that current reforms and sustained policy discipline are likely to support gradual strengthening of the country’s credit profile over the medium term.

The latest rating action reinforces the government’s strategy to stabilise public finances and restore investor confidence, marking a significant step forward in addressing structural vulnerabilities and improving the Maldives’ overall economic outlook.