Hong Kong's Fitch Ratings has downgraded the Maldives' Long-Term Foreign-Currency and Local-Currency Issuer Default Ratings (IDR) to 'B' from 'B+' and revised the Outlook from 'Stable' to 'Negative'.
Maldives has been seeking sovereign credit rating since 2016. The credit rating agency has maintained a 'Stable' outlook for Maldives for the past two years.
However, Fitch expects the Maldives' economy to be hit hard by the coronavirus pandemic because of the dominance of the tourism sector.
According to Fitch, a deep recession seems unavoidable, as tourism directly accounts for about 25% of the archipelago's GDP, according to national accounts data, and even more indirectly. The credit rating company forecasts a 5% contraction in economic activity in 2020.
Fitch further expects inflows of foreign currency and government revenue to fall significantly as a result of the halt in tourism. As a result, the fiscal deficit is expected to widen to 12% of GDP in 2020 from 5.7% in 2019.