The finance ministry has assured that the Maldives has not yet met a situation in which debts could not be serviced, and that loans would not be defaulted on.
This comes after Moody’s downgraded the Maldives’ credit rating from B3 to Caa1, citing concerns about debt repayment.
In a statement issued in response to the credit rating downgrade, the finance ministry claimed that Moody’s failed to take into account recent economic and debt improvement.
While acknowledging that debt was above 100 percent of GDP at the worst COVID-19 circumstances, the finance ministry highlighted that debt has since dropped as the economy has improved. Furthermore, it indicated that the government has the financial potential to repay loans without defaulting on them.
The finance ministry also stated that the Maldives has not defaulted on any loans and that the government will do all possible to guarantee that this remains the case.
Furthermore, the finance ministry noted that Moody’s upgrade of Maldives’ outlook from negative to stable is a sign of the company’s endorsement of the government’s debt-management plans.
The finance ministry claimed that, despite rising interest rates in commercial banks and other monetary institutions, other lending sources continue to offer cheaper interest rates, citing a recent Sukuk sale of USD 300 million at an average interest rate of 3.5 percent.
With the effectiveness of the vaccine program and gains in tourism, the country’s GDP is predicted to rise by 22.7 percent by the end of the year, according to the finance ministry.
The statement also mentioned that the government will meet with investors to discuss the Moody’s report and provide an update on development plans.
In addition to Moody’s, the World Bank and International Monetary Fund have expressed concern about the country’s dire debt situation, asking the government to take action. International monetary groups have recognized the Maldives’ current debt situation as the greatest threat to the economy.