Debt Management is one of the key functions of the Ministry. Effective public debt management reduces financial vulnerabilities, contributes to macroeconomic stability, preserves debt sustainability, and protects the government's reputation among investors. The Ministry sets policies and strategies related to debt management, and closely monitors the performance of the public debt portfolio.
With the enactment of the Fiscal Responsibility Act (FRA) in 2013, the Ministry is required to prepare and submit a Medium-Term Debt Management Strategy (MTDS) to the People’s Majlis (parliament) annually. The MTDS should include public debt targets; the level at which the total public debt would be maintained as a percentage of GDP; the target share of external and domestic debt in the total debt portfolio; the steps planned or currently being taken to mitigate debt related risks; and the utilization of borrowed funds. At present the government uses the World Bank MTDS toolkit to prepare the strategy.
The sovereign credit rating for the Republic of Maldives is assigned by two of the three major credit rating agencies in the world - Moody’s Investors Service and Fitch Ratings. The first sovereign credit rating issued and published for the Maldives was in September of 2016, where Moody’s assigned a B2 rating for the Maldives. In May of 2017 Fitch Rating became the second rating agency to rate the Maldives, with a B+ rating. Since the initial rating, Maldives has maintained these respective ratings from Moody’s and Fitch.
The Annual Borrowing is geared to fulfill the debt management objectives by ensuring the financing needs of the government are met on a timely basis; borrow at lowest possible cost and consistent with a prudent degree of risk; improve debt transparency and strengthen investor confidence; promoting and development of the domestic debt capital market; and pursuing any other actions considered to positively impact the public debt and fiscal stability of the country.
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