It is too early to celebrate Fitch Ratings upgrade; until we reach a 'B' rating, we must remain in a state of high alert: Zariyand

Financial expert Ismail Zariyand has stated that although Fitch Ratings has upgraded the Maldives' Long-Term Foreign-Currency Issuer Default Rating (IDR) from 'CC' to 'CCC-', it is not yet cause for celebration.

Speaking on RaajjeTV’s Independence Day special program, "From Independence to Subjugation: Financial and Economic Enslavement," Zariyand delivered a scathing critique of the current administration's fiscal and economic policies.

Zariyand countered the government's claims that the Maldives' credit rating upgrade from 'Double C' to 'Triple C' was a result of its ongoing efforts and that it aims for further improvement, stating that this development is not a cause for celebration.

Fitch Ratings serves as an indicator for those investing in the Maldives, as well as for lenders, bondholders, and creditors. It informs them whether the entity they are lending to is capable of meeting its debt obligations. Therefore, there is no reason to celebrate this. Looking at the current grade, it remains in the 'C' category. Whether it moves between CC or CCC, the presence of a 'C' rating signifies an inability to repay debt. It indicates that you are a high-risk entity; you simply cannot settle your debts.

Ismail Zariyand

Zariyand explained that a 'CC' rating, for instance, signifies a high level of risk, while a 'CCC' rating serves as a critical warning of vulnerability. He further noted that reaching a 'D' rating indicates a country is in default, emphasizing that the nation's current situation remains far from a cause for celebration.

When Sri Lanka went bankrupt in May 2022, it had been sitting at a Triple-C rating since that December—exactly where the Maldives stands today. At the time, they insisted nothing was wrong and that bankruptcy was not on the horizon. Their local newspapers were filled with rhetoric claiming the 'C' rating was actually a positive sign. Yet, while they were busy spinning that narrative, the country collapsed into bankruptcy within just four months. Unless we manage to climb back to a 'B' rating, we might as well be sitting here with wet rags on our heads in despair.

Ismail Zariyand

Government Spokesperson Mohamed Hussain Shareef has stated that the recent downgrade by Fitch Ratings was not a result of the current administration's policies. Elaborating on the rating, Shareef further noted that since its inception, the government has been focused on managing inherited debt and strengthening the economy. He highlighted that the improvement in the Maldives' credit rating from a 'CC' to a 'CCC' category was a direct result of the government's ongoing efforts, adding that the administration's ultimate goal is to further enhance the country's fiscal standing.

Shareef stated that an improvement in Fitch Ratings would shift the perspective of development partners toward the Maldives and its economy. He further noted that such progress would attract additional investments to the country, adding that celebrations, including fireworks, would be held once these milestones are achieved.

When the current administration took office in 2023, the Maldives' credit rating was in a stronger position than it is today. Consequently, many are calling on the government to implement robust measures to restore the country's Fitch rating to its previous standing.