India decides to rollover $50 million as requested by Maldives

In a goodwill gesture, India on Thursday said it has decided to rollover a USD 50 million Treasury Bill for an additional year upon the request of the Maldives government.

"At the request of the Government of Maldives, the State Bank of India ( SBI ) has subscribed the USD 50 mn 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," the High Commission of India in Maldives said in a press release.

SBI bought the Treasury Bill under an agreement signed by the previous government. SBI has bought a total of USD 200 million in Treasury Bills for USD 50 million for each one, the Adhadhu news portal reported.

The Treasury Bills were previously rolled over annually with interest paid by the Indian government. However, the government of President Mohamed Muizzu repaid USD 50 million in January this year, it said.

Maldives had requested the Indian government to extend the deadline for repayment of the remaining USD 150 million. India agreed to rollover USD 50 million in May and a second USD 50 million payment was due today.

"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," Foreign Minister Moosa Zameer said in a post on X on Thursday.

Earlier in May 2024, the SBI had similarly subscribed a USD 50 mn T-bills under the same mechanism, again on the request of the Government of Maldives.

In a statement, the Foreign Ministry Thursday thanked the "generous support that the Government of India has been providing to the Maldives in the form of budgetary 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 development comes days after Foreign Minister Zameer acknowledged that the Maldives-India ties witnessed rough patches in the initial days of President Muizzu-led government but insisted that the two countries have resolved the “misunderstandings".

India's relationship with the Maldives came under strain since Muizzu, known for his pro-China leanings, took charge as the President. Within hours of his oath, he had demanded the withdrawal of Indian military personnel manning three aviation platforms gifted by India to the Maldives. After talks between the two sides, the Indian military personnel were replaced by civilians.

Unlike his predecessors, who made the first port of call to New Delhi after assuming office, Muizzu travelled to Turkiye first and to China for his first state visit in January. He visited New Delhi on June 9 to attend Prime Minister Modi’s swearing-in ceremony.

Muizzu will travel to India on an official visit "very soon", his spokesperson said last week.

The Maldivian government is also working to defer repayment of loans taken from other countries including China.

The Maldives owes much of its external debt to China and India. The government's debt servicing commitments amount to USD 409 million this year, placing additional stress on its already limited foreign currency reserves.

Maldives reserves currently stand at USD 444 million, with usable reserves at USD 61 million.