Another year, another rescue: India extends Maldives’ $50m debt in emergency support

SBI extends Treasury Bill repayment by one year as part of emergency aid; move underscores India’s Neighbourhood First policy

India on Thursday announced the extension of a $50 million Treasury Bill subscribed by the State Bank of India (SBI) on behalf of the Maldives government, marking yet another instance of New Delhi stepping in to keep its island neighbour’s finances afloat.

The Indian High Commission in Male, as per PTI, confirmed that the repayment deadline has been rolled over for one more year, calling it 'emergency financial assistance' extended at the request of the Maldives government.

“This has been done under a unique Government-to-Government arrangement,” the mission said, noting that since March 2019 India has been facilitating multiple such subscriptions annually, interest-free.

Building on Modi’s outreach

The announcement comes close on the heels of Prime Minister Narendra Modi’s state visit to the Maldives, where he was the guest of honour at the country’s 60th Independence Day celebrations. That visit saw talks on a potential free trade agreement and several financial accords, a clear signal of warming ties after a recent period of strain.

Maldives’ state broadcaster PSM News described the rollover as part of “a series of diplomatic overtures aimed at strengthening the economic partnership.”

Finance diplomacy in action

The fresh extension was formalised during a meeting between Maldives Finance Minister Moosa Zameer, Indian High Commissioner G Balasubramanian, and senior officials from India’s Ministry of External Affairs.

According to the Maldives Finance Ministry, the rollover reflects India’s 'continued confidence and assistance' and demonstrates the depth of financial collaboration between the two nations.

The talks also covered trade relations and India’s Line of Credit (LoC) projects in Maldives. Both sides discussed ways to expand bilateral trade and iron out bottlenecks in ongoing infrastructure projects funded by Indian credit lines.

A larger financial lifeline

The $50 million rollover is only part of a wider financial web linking the two countries.

India earlier deferred repayment of a $100 million bond issued as budget support.
A $750 million currency swap facility has also been extended, of which $400 million is currently in use by the Maldives government.
Male is in talks with the Reserve Bank of India to access the remaining Rs 30 billion under the swap window.

“The T-bill is part of $200 million taken as budget support in 2019 by the former administration led by Ibrahim Mohamed Solih,” PTI reported, citing Maldives portal Edition.mv, adding that India has already granted multiple extensions on tranches of that loan.

Projects on the ground

Alongside financial aid, the two countries reviewed progress on the Greater Male Connectivity Project, a flagship Indian-funded initiative linking Male to Thilafushi. The review was co-chaired by Maldives Minister of Construction Abdulla Muththalib and Indian High Commissioner Balasubramanian, with participation from Exim Bank of India, project contractor Afcons, and consultant Arup.

The bridge is part of a broader Indian strategy to anchor Maldives to its Neighbourhood First policy and its Vision MAHASAGAR initiative for maritime growth and security.

For India, the rollover is more than just a financial transaction. It is a geopolitical statement: a reminder that New Delhi remains Maldives’ first port of call in times of fiscal distress, even as Male navigates its relationship with other powers such as China.

For the Maldives, heavily dependent on tourism and battling high debt levels, India’s willingness to keep extending these lifelines provides much-needed breathing space, and keeps the economy ticking.

As Finance Minister Zameer summed it up after the talks: “We reviewed progress of India’s LoC-financed projects, addressed key challenges, and explored ways to strengthen Maldives-India trade ties.”