Ratings giant Moody’s has indicated that they would consider raising ratings for the Maldives if fiscal deficit is lowered.
Moody’s said that if the deficit continues to increase, then it will impact the ability for the nation to borrow. At 65.7 percent of GDP in 2016, debt is significantly above the median for B-rated sovereigns and will likely rise further over the next two to three years, with the planned implementation of large public-sector infrastructure projects.
Moody’s added the recent sale of bonds worth US$ 50 million will not impact the current B-2 rating issued to the Maldives. The rating giant indicated that a change in the current rating will only happen when the Government brings in changes to debt and diversify the economy’s productive base. It also highlighted that political sphere must become stable to allow economic progress.
Noting the high reliance on the tourism sector, Moody’s said that a natural or political change in the nation can negatively impact ratings.
The Maldives’ B2 issuer rating reflects Moody’s assessment of low economic, government financial and institutional strengths, and moderate susceptibility to event risk.
While Moody’s had highlighted on debt, International Monetary Fund (IMF) had been expressing concern over the debt situation for years. In response to this, Finance Minister Munawwar had expressed his distaste, likening IMF and other similar organizations to imperial aggressors.
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