The Maldives earns its first-ever credit upgrade: how two years of reform turned the country's finances around

On 8 October 2026 the rating agency Moody's raised the Maldives' credit rating one step, from Caa2 to Caa1, with a stable outlook. The Ministry of Finance announced the decision the same day; the rating action is listed on Moody's website.

A credit rating is a letter grade for how likely a government is to repay its debts on time, and it decides how much a country pays to borrow and who is willing to lend to it. For the Maldives, the significance of this grade is not the letter but the direction. In the ten years Moody's has rated the country, every decision until now was a downgrade or a warning. This is the first time Moody's has ever moved the Maldives up. The change of outlook from negative to stable in November 2025 was the first good signal; this is the first good rating. Fitch, the other main agency, had already upgraded in June.

Both agencies gave the same reason: the government repaid its largest foreign bond from its own savings, and it could do so because of rules it introduced from 2024 that changed how the Maldives earns, keeps and spends its dollars. This piece sets out those rules, one by one, and the numbers that show each of them working.

Ten years of warnings, then the first step up

The Maldives had no credit rating at all until 2016. On 4 September 2016 Moody's assigned the country its first sovereign rating, B2 with a stable outlook, as the Maldives Independent reported at the time. Fitch followed with a B+ rating in May 2017. The government sought the ratings for a specific purpose: to borrow on international markets for the first time. On 31 May 2017 the Maldives issued its first international sovereign bond, US$200 million over five years at 7 percent on the Singapore Stock Exchange, later increased to US$250 million, as the Ministry of Finance announced. Moody's gave the bond the same B2 grade as the country. At that first rating, Moody's listed healthy tourism-driven growth and a large revenue base as strengths, and a high and rising debt burden with a large share in foreign currency as the main weakness. That weakness is what every later action responded to, until 2025.

The full record is assembled from the Ministry of Finance credit rating page and press reports of each action.

The slide began before the pandemic: the 2018 warning concerned borrowing for large projects and the guarantees issued to state companies. The 2021 downgrade came after tourism had reopened, because of a US$500 million Islamic bond, called a sukuk, raised that year to replace the 2017 bond, by then US$250 million; the Maldives Financial Review recorded Moody's reasoning. The whole US$500 million fell due on one day in April 2026. September 2024 was the low point: reserves of US$437 million, about six weeks of imports, as Atoll Times reported. Within two years of that low point, the rating was moving the other way.

The debt that doubled, and the year it started falling

Public debt means what the government owes plus the loans of state companies it has promised to cover. Figures are from the Ministry of Finance's debt strategy for 2018, its debt bulletin for 2020, and the MMA debt table from 2021.

Calculations by Good Morning Maldives (GMM): between 2018 and 2023 the debt more than doubled, rising by MVR65.4 billion, or 108 percent. The World Bank and IMF traced the rise to housing projects, the airport expansion and state company borrowing outside the budget, before the pandemic added more. By 2024 the IMF was describing the debt as unsustainable without a change of policy.

The new government inherited that position in late 2023. The ratio peaked in 2024 while the new rules were being put in place, and then turned. Between March and June 2026 the total debt fell by MVR2.2 billion, the first fall in the MMA's published series, and foreign debt dropped by MVR7.3 billion in a single quarter. The July figure of 122.6 percent of GDP is more than 11 points below the 2024 peak. A debt ratio that had risen every year since 2018 is now falling.

Reform 1: Tourism dollars now stay in the Maldives

Until October 2024 the rule governing foreign currency dated from 1987, and nothing required a resort's earnings to enter a Maldivian bank. Much of it never did: a guest paid a foreign operator, who settled with a company abroad. The Foreign Currency Regulation of 1 October 2024 changed that, and the Foreign Currency Act (32/2024), passed on 12 December 2024 and in force from 1 January 2025, made it law. Resorts must deposit and convert US$500 per tourist each month or 20 percent of their dollar sales; guesthouses US$25 per tourist; large non-tourism firms 20 percent of dollar sales, with fines for non-compliance, as Crowe Maldives summarises.

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The result: in 2025, 182 businesses registered under the Act and deposited US$670.8 million with Maldivian banks. The MMA released US$1.1 billion into the foreign exchange market, 10 percent more than in 2024, and its dollar disbursements to individuals, businesses and government rose 29 percent, according to its annual report as reported by MMTV. Moody's called the resulting rise in reserves structural, meaning it expects it to last. The Ministry's press release notes the measures were expanded in 2026.

Reform 2: The state now earns in the currency it owes

The government's debts abroad are in dollars; its revenue was mostly in rufiyaa. In November 2024 the Majlis amended three tax laws, as KPMG recorded: airport departure and development fees rose from 1 December 2024 (economy class for foreigners from US$30 to US$50; business from US$60 to US$120); the Green Tax doubled from US$6 to US$12 a night from 1 January 2025; and the tourism goods and services tax rose from 16 to 17 percent from 1 July 2025. All are collected in dollars.

The result: government foreign currency revenue passed US$1 billion in 2025, up 39 percent on the year before, as Moody's noted in its November 2025 decision.

Reform 3: A savings fund that paid off a half-billion-dollar bond

The Sovereign Development Fund exists to hold dollars for future repayments. Its cash stood at US$15 million in 2024. The higher Airport Development Fee is now paid directly into it. By 9 November 2025 the fund held US$126 million, and on 2 April 2026 it paid the US$500 million sukuk in full, with its final profit payment of US$24.68 million, as the Ministry confirmed.

This is the decision the agencies singled out. For nine years the pattern had been to meet each large repayment by borrowing a larger amount: the 2017 bond became the 2021 sukuk, twice the size. As late as May 2025 the plan was still to replace the sukuk with a new one. Instead the government saved and paid. The chain from 2017 to 2021 was broken rather than extended to 2031.

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Reform 4: The budget stands on its own, not on the central bank

The Fiscal Responsibility Act limits how much the MMA may lend directly to the government. That limit was suspended in April 2020 and stayed suspended until the end of 2023, long after tourism had recovered. It came back on 1 January 2024. A government that cannot print its deficit has to raise the money or spend less, and this one did both. Moody's recognised "the effective fiscal and monetary policy coordination between the Government and the MMA", in the Ministry's words.

Reform 5: Spending brought under control

The ADB notes the 2025 deficit narrowed mainly through cuts to capital spending. The first quarter of 2026 closed with a surplus of MVR2.3 billion on revenue up 11.6 percent, according to Atoll Times.

Reform 6: A billion dollars of foreign debt cleared in one quarter

In one quarter of 2026 the government settled the sukuk, the US$400 million currency swap with India's central bank and US$100 million of Indian treasury bills, and on 17 September cleared the last of a US$150 million emergency loan from 2019, as The Print reported. A separate US$100 million bond was extended to 2031. About US$1 billion of foreign obligations were cleared in three months, per Atoll Times. New money this year came only on concessional terms: US$40 million from the World Bank, US$50 million from the ADB and US$40 million from the OPEC Fund.

The scorecard: from low point to upgrade

Fitch put it plainly in June: "default risks have eased following successful repayment of the Maldives' sukuk," as the Daily FT reported. Moody's reached the same conclusion in October. Two agencies, two upgrades, one cause.

A turnaround built to last

The lasting change is not the letter. It is that the Maldives has shown its lenders it can meet a large debt from its own earnings, and has done so by changing the rules rather than by one lucky year. In under three years the government has written a foreign currency law that had been missing since 1987, moved the state's income towards the dollars it owes, rebuilt a savings fund from US$15 million to the point where it could retire a US$500 million bond, kept the central bank out of the budget, and turned a debt ratio that had risen every year since 2018 into one that is falling. Two rating agencies, reading the same evidence, have each recorded their first upgrade of the Maldives in a decade.

Those rules now belong to the country. Any future administration will inherit the Foreign Currency Act, the dollar-based taxes, a savings fund with its own income, and a central bank that does not lend to the budget, together with a public record of what each one achieved.

The credit is shared: the Ministry of Finance, the MMA, the Majlis that passed the laws, and the lenders who provided concessional finance while the measures took hold. The leadership that sequenced them, under His Excellency Dr Mohamed Muizzu, President of the Republic of Maldives, chose a path with no quick reward. Taxes on the main industry were raised in a difficult year, spending was cut, and half a billion dollars was paid rather than rolled over. The direction of the country's finances has changed for the first time in ten years, and the numbers show why.

That is the choice the agencies have recognised, and it is the standard every political actor in the Maldives, of any party, will now be measured against: the country's finances first, the next election second.