India has extended a one-year rollover on a $50 million Treasury Bill, which matured on September 19, 2024, providing crucial financial relief to the Maldives as the country grapples with significant economic challenges. This extension, facilitated through the State Bank of India in Malé, follows a similar rollover in May 2024, when another $50 million Treasury Bill was extended under the same terms.
The Maldives’ Ministry of Foreign Affairs noted that the decision to extend this loan came after a formal request by Maldivian Foreign Minister Moosa Zameer during discussions with Indian officials, including India’s External Affairs Minister Dr. S. Jaishankar. These discussions took place during Jaishankar’s official visit to the Maldives in August 2024.
In an official statement, the Government of the Maldives expressed its deep appreciation for India’s continued support in the form of budgetary assistance. This latest extension comes at a critical juncture as the Maldivian government implements a fiscal consolidation program to address its ongoing economic challenges, particularly heavy borrowing for infrastructure projects.
The financial relief comes just ahead of an October sukuk bond coupon payment of approximately $25 million. Sukuk bonds, which follow Islamic financial principles, do not involve traditional interest payments but instead offer creditors a share of profits. Investors had expressed concerns that the Maldives might default on this payment, but India’s latest support alleviates those fears.
Despite this reprieve, the Maldives still faces significant financial pressures. The government must repay over $500 million in debt next year, with a larger $1 billion obligation maturing in 2026. The country’s net international reserves, as of August 2024, have dwindled to $48 million, placing further strain on its ability to meet these liabilities. Maintaining the rufiyaa’s peg to the US dollar also adds to the country’s challenges.
India has become one of the Maldives’ largest creditors, along with China, which is also playing a role in the island nation’s economic strategy. In recent developments, the Chinese central bank signed a memorandum of understanding with the Maldives to facilitate trade settlements in local currencies.
Meanwhile, President Mohamed Muizzu is set to visit India to further discuss bilateral ties and seek additional financial arrangements, including a proposed $400 million currency swap agreement.
