The Maldives is facing problems in repaying external debts, declining external financing and dwindling foreign exchange reserves.
The island state of the Maldives is on the brink of default. Bloomberg reported this on Thursday, August 29.
It is indicated that the country is facing a problem with the payment of external debts, a decrease in external financing and a reduction in foreign exchange reserves (from $700 million a year ago to $395 million at the end of June).
Due to these concerns, Fitch has downgraded the Maldives to ‘CC’, which stands for ‘increased risk of default’.
As the publication writes, by the end of the year, the Maldives must repay debts of $557 million, and next year – by $1 billion.
“It’s impossible to do this without external borrowing,” Bloomberg pointed out.
Fitch warned that government initiatives aimed at boosting tourism revenues would not be enough to prevent default. Maldives urgently needs to raise at least $200 million to start restructuring sukuk (Islamic version of bonds).
Fitch’s downgrade comes just a month and a half after the International Monetary Fund also warned the Maldives of a looming debt crisis.
According to World Bank (WB) estimates, in 2020-2023. tourism contributes between 28 and 30% of the Maldives economy.
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Source: korrespondent
I’m Liza Grey, an experienced news writer and author at the Buna Times. I specialize in writing about economic issues, with a focus on uncovering stories that have a positive impact on society. With over seven years of experience in the news industry, I am highly knowledgeable about current events and the ways in which they affect our daily lives.