Ministry of Finance has stated the government does not agree with the downgrade received by the Maldives in the latest Fitch Ratings.
Maldives was downgraded from B to CCC in the Long-Term Foreign-Currency Issuer Default Rating (IDR) released by Fitch on November 4. Fitch stated the downgrade of the Maldives in the ratings reflects Fitch's expectation of deeper and more prolonged external liquidity pressures than previously forecast, and a sharp increase in the country's debt burden as a result of the COVID-19 pandemic and continued debt-funded infrastructure spending.
However, Ministry of Finance has stated the Government of the Maldives disagrees with this downgrade and the assessments of Fitch Ratings for this decision, stating economic outlook projects a more promising recovery with recent policies. The ministry stated the Maldives has never defaulted on its debt obligations so far, and this is a distinction that the country plans to hold into the future. The ministry stated the Maldivian government is fully committed to ensure that principal and interest for sovereign bonds are paid fully and in a timely manner.
The statement further read the Maldives has been successful in controlling the spread of Covid-19, as the country has firmly moved past the peak of the wave of Covid-19 infections in the country. The ministry further noted the tourism industry was restarted in July 15, and though slow by pre-pandemic standards, the tourism numbers have been improving month by month. As such, the ministry noted the arrivals have increased to 21,000 visitors in October, from under 2,000 arrivals in July. The ministry also noted the government has been successful in easing travel restrictions for a number of important tourism markets.
The finance ministry further stated the government is confident that the momentum in tourism recovery can be continued as the country enters its traditional peak season and beyond. The ministry also noted the government is proactively working to re-invigorate the tourism sector, within the context of the economic realities of the current times.
The statement by the finance ministry further read that the uncertainty regarding liquidity management and budget financing has come down to a great extent since March, when the previous ratings of Fitch were released. The ministry said the government has been immensely successful in narrowing the financing gap, through bilateral and multilateral sources including the Governments of India and Japan, as well as Asian Development Bank, World Bank Group, Islamic Development Bank Group, European Investment Bank, Asian Infrastructure Investment Bank, OPEC Fund for International Development and International Monetary Fund, among others.