After Fitch Ratings downgraded the Maldives’ long-term foreign-currency Issuer Default Rating (IDR) from ‘B-‘ to ‘CCC+’, the Ministry of Finance has responded with a reaffirmation on reforms.
Ministry of Finance, in a statement later on Wednesday, noted acknowledged Fitch Ratings’ observations of the island nation’s fiscal health, and said the downgrade is due to the increased risks linked with external financing and liquidity.
While Fitch highlighted Maldives government is expected to implement fiscal consolidation measures and reduce external financing requirements over the medium term, the ministry said that state’s commitment to reform was highlighted by the cabinet’s endorsement of the fiscal reform agenda this week.
The reforms are aimed at consolidating government expenditure and raising government revenue to ensure “fiscal and debt sustainability” over the medium term.
The ministry further said that while Fitch indicated fiscal trajectory at consolidating public debt levels could result in a positive revision of current ratings, the commitment to economic diversification and resilience to external shocks will improve the likelihood of positive outcomes in future ratings.
Maldives government has reaffirmed its commitment to meeting all of its debt obligations, and added that the state is confident that the robust economic outlook “coupled with the successful implementation of the fiscal reforms” will positively reflect future reviews.
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