Ministry of Finance has stated the Government of the Maldives will be able to repay its debt.
The finance ministry made the statement in response to Moody's Investors Service downgrading the rating of the Maldives from B3 to Caa1. Moody's stated the rating downgrade to Caa1 reflects the deterioration of fiscal strength of the country stemming from the significant increase in the debt burden during the COVID-19 pandemic, the prospect for large fiscal deficits in the coming years, and the risk of higher interest costs associated with the debt burden and greater commercial borrowing.
In a press release, the finance ministry criticised Moody's review by stating the company had not evaluated the current economic changes in the Maldives. The finance ministry detailed that the government is continuing to manage without defaulting on its debt despite the debt rising by 115% in 2020 due to the COVID-19 pandemic. The ministry stated that increasing tourist arrivals this year has significantly accelerated economic recovery and that the number of tourist visits in August is higher than the number of visits in the same month in 2019.
Additionally, the ministry stated the government estimates that GDP will grow by 22.7% this year and that the economy will recover better than expected this year, resulting in complete recovery by 2023. The ministry also stated that the recent issuance of Islamic bonds has confirmed the trust of foreign investors in the country and that the government's efforts to manage the COVID-19 pandemic will allow for more economic recovery.
Highlighting that Moody's has also changed its outlook of the Maldives from negative to stable, the finance ministry stated that it shows the company is encouraged by the government's debt management. The government has never defaulted on its debt and assures that it will continue to manage its debt responsibly, stated finance ministry.