Maldives Settles $50 Million Debt to India: What This Means for the Nation's Economy

Maldives Takes Steps to Alleviate Debt

Male: President Mohamed Muizzu announced on Monday that the Maldives has successfully repaid a USD 50 million treasury bill to India, as reported by local media.

This repayment is part of the government's strategy to alleviate its external debt.

The financial assistance from India was facilitated through treasury bills, commonly referred to as T-Bills, which were subscribed by the State Bank of India (SBI).

During a press briefing, Muizzu explained that the previous government had issued these USD 50 million treasury bills to SBI back in 2019 to address budget deficits.

He noted that instead of repaying the bills upon maturity, the former administration opted to roll them over annually at their request.

Muizzu's government has now repaid one T-bill in January 2024 and another on Monday, with an additional T-bill set to mature in September.

This action has reportedly saved the nation from a potential USD 150 million debt burden created by the prior administration, as quoted by the Sun.mv news portal.

Since 2019, India has consistently rolled over Maldivian treasury bills as part of its emergency financial support to the island nation.

Treasury Bills serve as short-term government debt instruments, allowing governments to raise funds from investors to meet immediate financial needs.

In the case of the Maldives, India's assistance involved SBI subscribing to the treasury bills issued by the Maldivian government, with repayments often extended through interest-free rollovers, alleviating short-term foreign exchange and fiscal challenges.