Moody’s warns Maldives over potential difficulties in obtaining loans

Photo: Finance Ministry

Malé, Maldives – International Credit Rating Agency Moody’s has stated that Maldives will face difficulties in procuring loans in the coming years due to the increased debt of the country.

In their quarterly review, Moody’s has rated different aspects of the Maldivian economy. One of this is the fiscal strength of the country, for which they have given a B1 rating. The agency stated that the B1 rating was given due to increased debt of the country which will cause difficulties in procuring loans in the future.

In addition to this, Moody’s gave a BA3 rating for the economical situation of the country. Justifying this rating, which is given to countries which are not the most appropriate for investing, Moody’s stated that Maldives is a country completely dependent on tourism and natural disasters and weather conditions may result in great damages to the country.

The most recent overall rating given to Maldives was in last March in which Maldives received a B3 rating. This is the same rating Maldives received last year during the Covid-19 pandemic. The rating dropped from a B2 to B3 in 2020 due to the impact on the tourism industry resulting from the pandemic.

The Government of Maldives took several loans from different financial institutions last year, due to the Covid-19 pandemic. Statistics of the Finance Ministry show that Maldives took loans worth over USD 500 million which is MVR 7.7 billion last year, in relation to Covid-19. This took the total debt of the county to MVR 86 billion at the end of the year which is 150 percent of the GDP.