The Government of the Maldives has welcomed the current ratings upgrade by Fitch, underscoring the positive developments with regard to economic performance and debt management.
The Fitch Ratings upgraded the Long-Term Foreign-Currency Issuer Default Rating (IDR) of the Maldives to B- from CCC. As per Fitch, the economy of the Maldives is expected to grow by 29.4% in 2021 and 10% in 2022.
In a tweet, Minister of Finance Ibrahim Ameer said with the recent Sukuk issuance and subsequent tender offer, the government has managed to take care of any short-term liquidity risk in a pro-market manner adding debt to Gross domestic product (GDP) is expected to improve as the economy grows. He also stated the government is focused on diversification of the Maldivian economy, increasing tourism bed capacity, and investing in infrastructure projects that contribute to higher economic growth.
Further, Minister Ameer said the fiscal deficit is expected to gradually narrow with fiscal consolidation measures noting focus is on growth rather than painful austerity measures that may prolong the economic crisis.
The upgrade of the IDRs of the Maldives reflects a stronger recovery for the tourism sector than previously expected, and an improved, though still challenging refinancing outlook for the sovereign's external debt over the next few years. Fitch forecasts GDP growth of 29.4% in 2021 and 10.0% in 2022, largely reflecting a low-base effect from contraction by 33.5% in 2020, one of the sharpest drops globally.
Fitch Ratings in the report said the recovery is likely to be gradual, but prospects for luxury tourism in the Maldives over the medium term should continue to be strong.