Maldives Foreign Minister Moosa Zameer expressed gratitude as India extended budgetary support to the Maldives in the form of a rollover of the $50 million Treasury Bill for another year on the Maldivian government’s request.
At the request of the Maldivian government, the State Bank of India (SBI) has subscribed the $50 million government Treasury Bills (T-bills) issued by the Ministry of Finance of the Maldives for a period of one more year upon the maturity of the previous subscription on September 19, the Indian High Commission in the Maldives said in a press release.
Zameer said the Indian government’s announcement demonstrates “enduring bonds of friendship between the Maldives and India”.
In a post on X, Mr Zameer stated, “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.”
The Indian aid to the island nation comes amid a potential threat of sukuk default, which would be the world’s first. Maldives has about $500 million in outstanding sukuk debt due in 2026, according to data compiled by Bloomberg.
This is the second rollover granted by the Indian government this year, following the first rollover of a $50 million Treasury Bill in May.
“Earlier in May 2024, SBI had similarly subscribed a $50 million T-bills under same mechanism, again on the request of the Government of Maldives. These subscriptions have been made at the special request of the Government of Maldives as emergency financial assistance,” the Indian High Commission press release stated.
In the press release, the Indian High Commission called the Maldives India’s key maritime neighbour and important partner under India’s ‘Neighbourhood First’ policy.
Bloomberg reported that the Maldives faces a $25 million payment in October, part of its $500 million sukuk debt. The Maldives Monetary Authority has confirmed that it is in discussions for a $400 million currency swap with India, but India’s Ministry of External Affairs and other relevant bodies have not commented on the matter.
The economic challenges faced by the Maldives have worsened in recent years. The country’s debt has ballooned to 110 percent of its GDP as of March 2024, according to the Observer Research Foundation, while foreign reserves have dwindled.
At the end of August, the Maldives held $437 million in reserves, only enough to cover around six weeks of imports. With significant external debt repayments due in 2025 and 2026, rating agency Moody’s recently downgraded the country’s credit rating further into junk status, citing a heightened risk of default.