According to a press release issued by the Ministry of Finance and Public Enterprises on Thursday, international credit rating agency Moody’s Ratings has upgraded Maldives’ sovereign credit rating to Caa1 from Caa2, with a Stable outlook.

The upgrade reflects Moody’s view that the near-term risk of default of the Maldives has materially declined, supported by large debt repayments, stronger foreign exchange inflows and continued access to international financing.

The improvement was on the back of the successful repayment of the USD 500 million sukuk in April 2026 and the settlement of a USD 400 million currency swap facility extended by the Reserve Bank of India, the Ministry said.

The rating agency also noted USD 100 million of securities investments by the State Bank of India in May and September 2026, and extension of the USD 100 million Eurobond to 2031.

The Ministry said that Moody’s acknowledged the effective coordination between the Government and the Maldives Monetary Authority (MMA) on fiscal and monetary policies.

These measures include reforms to boost foreign currency earnings and the mandatory conversion of foreign currency via the local banking system. The measures introduced in 2024 and broadened in 2026 are likely to improve foreign exchange inflows, sustain the accumulation of Gross International Reserves and improve the Sovereign Development Fund (SDF).

The Government’s continued access to bilateral and multilateral financing has also relieved immediate liquidity pressures.

The Ministry cited further financing from the World Bank of USD 40 million, USD 50 million from the Asian Development Bank and USD 40 million from the OPEC Fund.

The Government is also engaging development partners to secure additional financing on concessional terms, while ensuring its commitment to long-term debt sustainability.

Meanwhile, Maldives’ public and publicly guarantyd debt declined to 122.6 per cent of GDP as of end-July 2026, from 129.2 per cent at end-2025.

The drop was because of high repayments of external debt and prudent fiscal measures being taken to put the debt path on a more sustainable footing, the Ministry said.

The credit rating has been upgraded, but the Ministry admitted that the Middle East conflict continues to present economic challenges, particularly through higher energy prices.

It said the Government had introduced measures to protect vulnerable groups from the economic impact of the conflict while supporting wider economic stability.

Looking forward, the Government plans to focus on fiscal consolidation, strengthen the external sector and accelerate the transition to renewable energy.

The Ministry also highlighted the importance of improving trade infrastructure and economic resilience as major priorities to ensure sustainable growth.

The upgrade is positive for the Maldives’ sovereign credit standing but the Caa1 rating is still in Moody’s speculative-grade category, indicating that substantial credit risks remain.