India has renewed its emergency financial assistance to the Maldives by extending its subscription to Maldivian government treasury bills worth $50 million for another year, marking the second instance of such aid in 2024. This move indicates a potential easing of tensions between the two nations, which had deteriorated when Maldivian President Mohamed Muizzu came to power last year on an “India Out” campaign and demanded the withdrawal of over 85 Indian military personnel stationed to operate three aircraft in the Maldives.
The State Bank of India (SBI) subscribed to the Maldivian treasury bills for $50 million from the maturity date of the previous subscription on September 19, 2024, according to a statement by the Indian High Commission in Male. Earlier in May 2024, the SBI had also subscribed to treasury bills worth $50 million at the Maldivian government’s request as part of emergency financial assistance. The statement noted that India’s continued support is reflected not only in the current subscription but also in the extension of a special export quota for essential commodities to the Maldives for another year.
India emphasized the Maldives’ importance as a key maritime neighbor and a significant partner under its “Neighbourhood First” policy. Maldivian tourism minister Ahmed Adeeb thanked India in a post on X for the “crucial budgetary support,” noting that it strengthened the bond between the two countries and aided the Maldives’ pursuit of economic stability and growth.
The Maldives is currently facing a severe economic crisis, with revenues and foreign currency reserves hit by the Covid-19 pandemic and the Russia-Ukraine conflict. Under former President Ibrahim Solih, the Maldives borrowed from private lenders and India, pushing the national debt to nearly $8 billion by 2023.
However, relations between India and the Maldives began to improve after Muizzu attended Indian Prime Minister Narendra Modi’s swearing-in ceremony in June, with Muizzu expected to make a bilateral visit to India soon. Maldivian foreign minister Moosa Zameer recently acknowledged that bilateral ties had faced challenges during the early days of Muizzu’s government but said misunderstandings had since been resolved after India withdrew its military personnel, replacing them with civilian experts earlier this year.
