American credit rating agency, Moody’s Investors Service revealed in a new report that the credit profile of the Maldives (B2 negative) reflects credit strengths stemming from a rapidly growing economy, supported by a competitive tourism sector. However, the agency said that the implementation of large infrastructure projects has given rise to twin budget and current account deficits, as well as a significant ramp-up in debt.
The agency says the narrowly diversified economy of the Maldives is exposed to environmental risks, whilst the small labor market characterized by a scarcity of skills, and strained government liquidity position is all a part of the credit challenges.
Moody’s conclusions are contained in its just-released credit analysis on the Maldives, which examines the sovereign in four categories: economic strength, which Moody’s assesses as “low (+)”; institutional strength “low (-)”; fiscal strength “moderate (-)”; and susceptibility to event risk “moderate”.
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