Maldives disagrees with the downgrade and assessments of the Fitch Ratings, as the economic outlook projects a "more promising" recovery.
Maldives credit ratings saw a major fall in the Fitch Ratings due to the weakened economic growth of the island nation in the face of the Covid-19 pandemic. Maldives long-term Foreign Currency Issuer Default Rating dropped from ‘B’ to ‘CCC’ on Thursday.
In a statement released in connection to the credit rating downgrade of Maldives by Fitch Ratings, the Ministry of Finance revealed that the Maldivian government disagrees with the downgrade and the assessments of the Fitch Ratings for this decision, since the economic outlook projects a “more promising” recovery with recently enacted policies.
Stressing that Maldives has “never” defaulted on debt obligations thus far and that this is a distinction that the island nation plans to hold into the future, the ministry noted that the incumbent government is “fully committed” to ensure that interest for sovereign bonds, are fully paid in a timely manner.
The country has been “successful” in controlling the spread of Covid-19 seven months since the crisis surfaced in Maldives, having moved past the peak of the Covid-19 wave.
The finance ministry noted that the country’s tourism industry, which was at a complete standstill for a little over three months since the government halted issuing on-arrival visas on March 27, has been improving month-by-month, since borders were reopened on July 15.
As such, from under 2,000 arrivals in July, arrivals spiraled to 21,000 in October.
Maldives is also observing an increase in flight frequencies and the government has also been successful in easing travel restrictions for a number of important tourism markets.
Currently, over 100 tourist resorts are operational and Maldives is confident that this momentum can be continued as the island nation, popular among zealous travelers worldwide, enters the peak season.
Within the context of the economic reality the country is adjusting to, the government is “proactively” working to re-invigorate the tourism sector. Maldives is also one of the main tourism economics to reopen after the lockdown with the proper guidelines implemented to restart tourism while still battling the virus.
The ministry went on to note that it has proven to be great advantage for the country in terms of restarting tourism safely, that tourist resorts are separated from the general population, being an archipelago nation.
Further, the ministry reiterated the government’s commitment to maintain the tourism marketing budget for the upcoming year, as the country works with the tourism industry to facilitate resorts and facilities to reopen, as well as working alongside partner nations to re-establish flights and ease travel restrictions for visitors.
As the Fitch Ratings noted, the economic outlook was downgraded in the months since their latest rating action in March. The ministry stated that the changes are reflected in the government’s own assessment of the economic impact, as updated throughout the year.
Despite this, the uncertainty regarding liquidity management and budget financing has come down to a great extent since March, this, the ministry noted, must be acknowledged.
The incumbent administration has been “immensely” successful in narrowing the financing gap, through bilateral and multilateral sources including the governments of India and Japan, the Asian Development Bank, World Bank Group, Islamic Development Bank Group, European Investment Bank, Asian Infrastructure Investment Bank, OPEC Fund for International Development, International Monetary Fund among others, with others yet in the pipeline.
The statement concludes after noting that the government will have an investor call at 12pm on November 10, after which details will be provided.
