Fitch has downgraded Maldives' credit rating, citing obstructions to repay debts.

In this regard, Fitch downgraded Maldives' Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'CCC+' from 'B-'.

Fitch attributed the downgrade risk associated with rising external debt coupled with weakening foreign reserves, external financing and liquidity metrics.

They detailed that Maldives’ foreign reserve, which stood at USD 748 million in May last year, had decreased to USD 492 million by May of this year.

Meanwhile, it was noted that the government has USD 233 million in sovereign external debt-servicing obligations and USD 176 million in publicly guaranteed external debt-servicing obligations due in 2024.

Fitch forecasts external debt servicing will climb to USD 557 million in 2025 and exceed USD 1.0 billion in 2026, including repayment of a USD 500 million Sukuk, which will intensify pressure on the government's external liquidity.

Nevertheless, Fitch expects the government to rely on bilateral and multilateral financing support and the general state debt to rise to 117.6% of GDP in 2026 from an estimated 109.4% in 2023 – which is more than double the projected median for other ‘B’ category nations.

Fitch is amongst the biggest three credit ranking agencies in the world. Maldives was first ranked by the agency in 2016.

A credit rating is an evaluation of the credit risk of a prospective debtor predicting their ability to pay back the debt, and an implicit forecast of the likelihood of the debtor defaulting.