Amid signs of a thaw, India extends emergency financial assistance to Maldives

India has extended emergency financial assistance to the Maldives by renewing its subscription to government treasury bills worth $50 million for a year, the second time this year it has offered such aid to the Indian Ocean archipelago.

The move comes amid signs of a thaw between the two countries after their relations plunged to a low when President Mohamed Muizzu came to power in the Maldives last year on the back of an “India Out” campaign and demanded New Delhi withdraw more than 85 military personnel deployed in the country to operate three aircraft.

The State Bank of India (SBI) subscribed the Maldivian government’s treasury bills worth $50 million for a period of one year from the date of maturity of the previous subscription, which was September 19, 2024, the Indian high commission in Male said in a statement.

In May this year, the SBI subscribed to treasury bills worth $50 million under the same mechanism, again at the request of the Maldivian government. These subscriptions were made at the special request of the Maldivian government as “emergency financial assistance”, the statement said.

“India has assisted the Maldives in times of need and the current subscription of T-bills, along with the government of India’s decision earlier this year of extending special quota for export of essential commodities for the Maldives by one more year reflect India’s continued support to the government and the people of the Maldives,” the statement said.

The Indian side also described the Maldives as a key maritime neighbour and an important partner under the “Neighbourhood First” policy.

Maldivian tourism minister Ahmed Adeeb, in a post on X, expressed his gratitude to the Indian government for extending the “crucial budgetary support” with the rollover of the treasury bills worth $50 million.

“This strengthens the deep bond between our nations and reinforces our path towards economic stability and growth,” Adeeb said.

The Maldives is currently grappling with a serious economic downturn, with its revenues and foreign currency reserves having been impacted by the Covid-19 pandemic and the fallout of the Russia-Ukraine conflict. The previous government headed by Ibrahim Solih had borrowed from private lenders and India to cope with these issues and the total debt of the Maldives increased to nearly $8 billion in 2023.

Relations between Male and New Delhi improved after Muizzu attended Prime Minister Narendra Modi’s swearing-in in June. The Maldivian leader is expected to make a bilateral visit to India in the coming weeks. Maldivian foreign minister Moosa Zameer recently acknowledged that bilateral ties had hit a rough patch in the early days of the Muizzu government but the two sides had since resolved their “misunderstandings”.

These matters were resolved when India withdrew its military personnel from the Maldives, Zameer said. India replaced the military personnel, who operated two helicopters and an aircraft used mainly for humanitarian missions, with civilian experts earlier this year.