External Affairs Minister S. Jaishankar with Minister of Foreign Affairs of Maldives Abdulla Khaleel during a meeting, in New Delhi, on January 3, 2025.
| Photo Credit: PTI
Even as the Maldives attempts to stabilise its economy amid challenges of high public debt and a widening fiscal deficit, India has rolled over a $50 million-treasury bill to support the neighbouring island nation.
In a statement on Monday (May 12, 2025), the High Commission of India in capital Malé said following a request from the Government of Maldives, the State Bank of India subscribed to the Treasury Bill, as part of India’s ongoing support with annual rollovers of treasury bills since 2019. “This has been done under a unique Government-to-Government arrangement, as emergency financial assistance to Maldives,” the Indian mission said.
Thanking External Affairs Minister S. Jaishankar, Maldivian Foreign Minister Abdulla Khaleel said on social media platform ‘X’: “This timely assistance reflects the close bonds of friendship between Maldives & India and will support the Government’s ongoing efforts to implement fiscal reforms for economic resilience.”
In 2024, the scenic island country saw tourist arrivals increase by 8.9% from the previous year, and reach an all-time high of 2.05 million. In an attempt to cash in on tourism revenue, the country’s chief foreign exchange earner, the government brought in new regulations late last year, mandating tourist resorts to exchange $500 per tourist per month to the local currency or Maldivian Rufiyaa. Earlier this month, President Mohamed Muizzu said the revised banking regulations saw the tourism sector exchange $214 million into Maldivian Rufiyaa, thereby boosting foreign reserves.
Maldives’s foreign currency reserves stood at $848.95 million at the end of April 2025, according to the Maldives Monetary Authority. All the same, the World Bank noted in its latest update on the Maldives: “Despite the recovery in official reserves, the coverage of usable reserves – compared to short-term essential imports and external debt service needs – remains at historic lows.”
While the Indian Ocean archipelago’s economy is on relatively stable grounds this year, the government has debt servicing commitments nearing a billion dollars each this year and next. Last year, the Reserve Bank of India agreed to extend currency swap facilities amounting to $400 million and ₹30 billion, extending critical assistance when the Maldives faced a severe financial crunch. “A deep fiscal consolidation – together with a clear financing strategy – is urgently required to reduce fiscal and debt vulnerabilities and ease liquidity pressures,” the World Bank said in its report.
Published – May 12, 2025 01:06 pm IST
