Moody’s Ratings has maintained the Maldives Government’s long-term local and foreign currency ratings at Caa2, while improving the country’s outlook from negative to stable. The agency also affirmed the Caa2 rating for Maldives Sukuk Issuance Limited and revised its outlook to stable, signalling a more positive assessment of the nation’s economic direction.

According to Moody’s, the outlook upgrade is driven by easing pressure on the country’s external finances. Stronger foreign currency inflows—supported by government reforms and a solid tourism sector—have helped stabilise the economy. The Maldives’ foreign exchange reserves have recovered significantly over the past year, rising to USD 859 million in October 2025 from a low of USD 364 million recorded in September 2024. The Sovereign Development Fund has also strengthened, with its cash balance increasing to USD 126 million as of 9 November 2025, compared to just USD 15 million a year earlier.

The agency credited these improvements to policy changes introduced in late 2024, including increases in dollar-based revenue such as the Tourism Goods and Services Tax and the Airport Development Fee. Data from the Maldives Inland Revenue Authority shows that dollar revenue reached USD 1.2 billion by October 2025, marking a 39 per cent jump from the same period last year. New regulations requiring tourism businesses to convert their earnings into Maldivian rufiyaa have further boosted the availability of foreign currency.

Tourism, the backbone of the economy, has also contributed to the recovery, with arrivals up around 10 per cent compared to last year. Higher TGST rates and updated airport fees have added to the improved revenue flow.

Moody’s highlighted that the Maldives’ access to external financing has remained strong, particularly with support from India. This includes the rollover of key dollar-denominated debts, the extension of a USD 400 million currency swap agreement, and a new rupee credit line worth USD 565 million introduced in June. These arrangements have helped reduce short-term financing risks during a period of tight global financial conditions.

Looking ahead, the Government has outlined plans to bring the fiscal deficit down to more sustainable levels in its 2026–2028 budget framework. Part of this strategy involves making regular contributions to the Sovereign Development Fund to reduce the national debt burden and strengthen long-term financial stability.

Moody’s noted that although last year’s downgrade to Caa2 placed pressure on the Maldivian economy, the reforms undertaken since then have improved overall confidence and supported a gradual rebuilding of economic resilience.