Finance Ministry opposes Fitch Ratings, disagree with lowered credit rankings

Finance Minster Ibrahim Ameer during a meeting with the Parliament's Public Accounts Committee on August 27, 2020. (Sun Photo/Fayaz Moos)

The Finance Ministry of Maldives has opposed the lowered credit rating of the nation by Fitch Ratings. 

The Ministry in a statement today expressed discontent towards the lowered ratings from a “B Minus” to “CCC”. The Ministry said that it did not accept the lowered ratings and said that the economic situation of the Maldives was recovering. 

The credit ranking agency, Fitch Ratings said that the risks of the Maldives defaulting on loan repayments were very real and that the economy was suffering beyond expectations. Forecasting a rebound by 16.0% in 2021 and 20.0% in 2022 Fitch Ratings said that development largely reflects a low-base effect, and is subject to risks related to the recovery in tourism, in particular from Europe. Fitch Ratings also expects the government debt to jump to 110.7% of GDP in 2020 and added that the fiscal deficit was expected to remain high, at 18.8% in 2021, due to low tourism-related revenue. 

Responding to the ratings, the Finance Ministry of Maldives said that Maldivian debt had never been defloated and that the government would maintain it this way. The Ministry also said that repayments of loans obtained by the government and state-guaranteed loans were being made on time. 

The Ministry also noted the fact that tourist arrivals to the Maldives were on the rise ever since the nation reopened its borders in July.

The Ministry said that the 2,000 tourist arrivals in July had increased by 21,000 by October alone. The Ministry said that more and more airlines were commencing travel to the nation and due to government efforts, the travel from important tourist source markets had also been made more convenient. 

More than 100 tourist resorts are currently operational and the Ministry said that in time for the peak tourist season, the tourism industry was set to resurge. The Ministry specifically noted the one island one resort concept of Maldives which meant that tourists believed in the safety of the nation. The Ministry said that the tourism promotional budget for next year would also be higher and more collaborative projects with resorts was set to be conducted. 

Even though questions were posed regarding the economy of the Maldives at the beginning of the pandemic, the Ministry said that the government was publicizing the economic statistics and information as well as changes in the situation. 

Fitch Ratings said that the Maldivian economy was one of the hardest hit due to the pandemic and projected a 30 percent fall, however, the Ministry said that the government was working to reduce the financing gap by working with financial institutions abroad. The Ministry noted India, Japan, World Bank, ADB, IDB and European Investment Bank, AIDB and OPEC in this sense. The Ministry also announced an investor call to be made on November 10.