India has extended financial support to the Maldives by rolling over its $50 million treasury bill subscription for another year, aiding the debt-ridden island nation amid its economic challenges and growing external debt. This move reflects the strong bilateral ties as Maldives faces rising debt levels and credit rating downgrades, limiting its access to international financing.
In a significant move underscoring the close diplomatic and economic ties between India and the Maldives, India has extended its financial support by rolling over a $50 million treasury bill subscription for an additional year. This decision, announced on Monday by India’s High Commission in the Maldives, comes at the request of the Maldivian government as the island nation grapples with mounting economic challenges.
The State Bank of India (SBI), which holds the subscription to the treasury bill issued by the Maldives’ Ministry of Finance, has agreed to extend the subscription, providing much-needed fiscal relief to the cash-strapped nation. Maldives’ Foreign Minister Abdulla Khaleel expressed gratitude on social media platform X, emphasizing that the assistance highlights the “close bonds of friendship” between the two countries. He added that this financial backing would support the Maldives’ ongoing efforts to implement fiscal reforms and enhance economic resilience.
The Maldives, strategically located in the Indian Ocean, has been navigating a difficult economic path marked by low foreign exchange reserves and a high debt burden. According to recent World Bank data, the country’s total public and publicly guaranteed debt surged to $9.4 billion in the last quarter of 2024. This figure amounts to more than 134% of the nation’s GDP—a troubling statistic that reflects a debt increase of over $1 billion year-on-year.
Moreover, credit rating agencies Fitch and Moody’s downgraded the Maldives’ credit ratings in the latter half of 2024, further constraining its ability to access global financial markets for new borrowing. The World Bank has warned of a significant spike in the Maldives’ debt servicing obligations through 2025 and 2026, raising concerns about the country’s fiscal stability in the near term.
India and China remain the Maldives’ largest creditors and regional rivals, each vying for influence in this strategically vital island nation. India’s timely extension of financial support is not only an economic lifeline but also a geopolitical signal reaffirming its commitment to maintaining strong ties with the Maldives amid shifting regional dynamics.
This renewed financial assistance from India comes at a critical juncture for the Maldives, helping the country avoid potential default risks and ensuring continued progress on key economic reforms designed to stabilize and grow its economy. As both nations work closely on this partnership, the move reaffirms the long-standing friendship and strategic cooperation in the Indian Ocean region.
