The Maldives government has welcomed Fitch’s recent rating improvement, highlighting strong achievements in economic performance and debt management.
Fitch Ratings raised the Maldives’ Long-Term Foreign-Currency Issuer Default Rating (IDR) from CCC to B-. According to Fitch, the Maldives’ GDP would rise by 29.4 percent in 2021 and 10 percent in 2022.
Finance Minister Ibrahim Ameer stated on Twitter that the government has addressed any short-term liquidity risk in a pro-market manner with the recent Sukuk issue and following tender offer, adding that debt-to-GDP ratio is expected to decrease as the economy develops.
He also claimed that the government is working to diversify the Maldivian economy, increase tourism bed capacity, and invest in infrastructure projects that would lead to stronger economic growth.
Ameer added that the fiscal deficit is likely to progressively shrink as fiscal consolidation measures are implemented, stressing that the emphasis is on growth rather than hard austerity measures that may prolong the economic crisis.
Fitch estimates GDP growth of 29.4 percent in 2021 and 10.0 percent in 2022, owing partly to a low-base impact after a 33.5 percent decline in 2020, one of the biggest dips globally.
According to Fitch Ratings, the recovery will be sluggish, but prospects for luxury tourism in the Maldives should remain good in the medium term.
