India has decided to extend the rollover of a $50 million Treasury Bill (T-bill) for the Maldives for an additional year. This move came in response to a formal request made by the Maldivian government.
According to a statement released by the High Commission of India in the Maldives, “At the request of the Government of Maldives, the State Bank of India (SBI) has subscribed the USD 50 million Government Treasury Bill (T-bills) issued by the Ministry of Finance of Maldives, for a period of one more year from the date of maturity of the previous subscription, September 19, 2024.”
Just in: India extends crucial budgetary support to the Maldives with the rollover of USD 50 million Treasury Bill pic.twitter.com/YoYyJ0fV01
— Sidhant Sibal (@sidhant) September 19, 2024
SBI and Treasury Bill History
This extension comes as part of an ongoing financial agreement between the two countries. SBI had previously subscribed to similar T-bills under an arrangement signed by a former Maldivian administration. A report from the Adhadhu news portal indicated that SBI has purchased a total of $200 million in Treasury Bills, including four installments of $50 million each.
In previous years, the Treasury Bills were renewed annually, with the interest payments covered by the Indian government. However, in January 2024, under President Mohamed Muizzu’s leadership, the Maldives repaid $50 million, reducing its outstanding debt to India.
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India Supports Maldives’ Financial Stability
The Maldives had approached India to extend the repayment deadline for the remaining $150 million. In response, India agreed to roll over $50 million in May 2024, with a second installment, due in September, now also extended.
“Sincere gratitude to External Affairs Minister @DrSJaishankar and the Government of #India for extending crucial budgetary support to the Maldives with the rollover of USD 50 million Treasury Bill. This generous gesture reflects the enduring bonds of friendship between #Maldives and #India,” Maldivian Foreign Minister Moosa Zameer expressed on social media platform X on Thursday.
This is not the first time India has provided such support. In May 2024, SBI had similarly subscribed to a $50 million T-bill on the Maldivian government’s request, demonstrating India’s commitment to aiding its neighbor.
Maldives Faces Economic Challenges
In a statement released on Thursday, the Maldivian Foreign Ministry acknowledged India’s continuous support. “This extension comes at a pivotal moment as the Government of Maldives is implementing a strong fiscal consolidation program to address the pressing economic challenges,” the ministry said.
The Maldives government is grappling with significant financial pressures, including debt obligations to both India and China. The country is set to make debt servicing payments amounting to $409 million this year, which has placed additional strain on its already limited foreign currency reserves. As of the latest reports, the Maldives’ foreign reserves stand at $444 million, with only $61 million in usable reserves.
Improved Diplomatic Relations Between Maldives and India
This extension of financial support from India also signifies a thaw in relations between the two nations after some initial tension under President Mohamed Muizzu’s administration. Muizzu, known for his pro-China stance, took office with policies that temporarily strained ties with India. Within hours of his inauguration, Muizzu had demanded the withdrawal of Indian military personnel stationed at three aviation platforms that India had gifted to the Maldives.
However, following diplomatic talks, the Indian military personnel were replaced by civilians, helping to ease tensions. Foreign Minister Zameer recently acknowledged that while the relationship had faced “rough patches” in the early days of Muizzu’s government, misunderstandings had since been resolved.
Unlike his predecessors, President Muizzu chose to make his first state visits to Turkiye and China rather than New Delhi, which had been the traditional first port of call for Maldivian leaders. However, he did travel to India in June 2024 to attend Prime Minister Narendra Modi’s swearing-in ceremony. His spokesperson also recently confirmed that Muizzu would soon make an official visit to India.
Broader Economic Concerns and External Debt
Aside from its debt to India, the Maldives is also seeking to defer repayments on loans it owes to other countries, including China. The Maldives’ growing external debt has led to significant financial pressures, and the country is working to navigate its fiscal challenges with the help of international partners.
With India’s continued budgetary support, the Maldives is expected to move forward with its economic consolidation efforts, hoping to alleviate some of the financial stress caused by its heavy debt servicing commitments.
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