Maldives repays $150 million loan to India as economic crises persist

The Maldives has repaid a loan of $150 million from India by settling the final tranche of treasury bills subscribed by the State Bank of India even as the Indian Ocean archipelago grapples with pressing economic issues.

The final tranche of treasury bills worth $50 million, out of a total of $150 million subscribed by the State Bank of India (SBI), was settled by the Maldives government on September 17, external affairs ministry spokesperson Randhir Jaiswal told a regular media briefing on Friday.

The treasury bills were subscribed by the SBI in 2019 and had been extended on six occasions, each time for a year.

While the principal amount of the treasury bills was paid by the Maldives government, the interest payment on the treasury bills worth $150 million over the past five years was borne by the Indian government. “The total amount paid by India in interest settlement was close to $45 million,” Jaiswal said.

Noting that India has a longstanding development partnership with the Maldives, Jaiswal said New Delhi also extended a currency swap facility of ₹30 billion to the Maldives to support the country’s financial system.

“In addition, the SBI has also subscribed to treasury bonds worth $350 million, which are valid till 2029 and 2030,” Jaiswal said.

Apart from financial cooperation, India supplies essential commodities to the Maldives as part of a development cooperation partnership, he said.

The repayment of the Indian loan will result in the foreign exchange reserves of the Maldives dipping below the $600-million. The reserves of the country stood at $643.8 million at the end of August, according to the Maldivian Monetary Authority (MMA).

India has played a key role in helping the Maldives cope with a balance of payments and sovereign debt crisis in recent years, providing credit lines and assistance under the SAARC Currency Swap Framework. The short-term financial support, including a $400-million currency swap facility provided in October 2024, helped the Maldives address liquidity stresses.

Relations between India and the Maldives nose-dived some years ago when President Mohamed Muizzu came to power on an “India Out” campaign and sought to move his country closer to China. However, ties improved after Muizzu was among regional leaders invited to Prime Minister Narendra Modi’s inauguration in 2024.

The thaw continued with Muizzu’s visit to India in October 2024, when India agreed to provide support of more than ₹6,300 crore to the Maldives to tide over a foreign exchange crisis.

The Maldives’ economy faces severe problems because of high public debt, low foreign exchange reserves, and heavy dependence on tourism and imports.