Fitch Ratings has upgraded the Maldives' Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'B-' from 'CCC'.
Last November, Fitch downgraded the Maldives' rating from B- to CCC last year, expecting prolonged external liquidity pressures and a sharp increase in the country's debt burden as a result of the COVID-19 pandemic. However, Fitch has reviewed its assessment one year later, and has upgraded the Maldives' rating back up to B-, due to stronger recovery for the tourism sector than previously expected, and an improved, though still challenging refinancing outlook for the sovereign's external debt over the next few years.
Fitch noted that tourist arrivals so far in 2021 have rebounded sharply to around 70% of pre-pandemic levels, and the number of bed nights has recovered even faster, with tourists on average tending to stay around three days longer than in the past. In their baseline scenario, Fitch assumes a gradual further normalisation of tourist arrivals to over 80% of pre-pandemic levels in 2022 and to around 100% in 2023.
