[REVISION HISTORY]

Maldives-India debt repayment and forex crisis

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2026-10-18 05:21 UTC → 2026-10-19 05:49 UTC · added ~~removed~~

The Maldives has completed the repayment of a USD 150 million budget-support facility facilitated by India. The final USD 50 million installment was settled on September 17, 2026, clearing a total liability consisting of three Treasury bills subscribed by the State Bank of India (SBI). This facility was originally established in 2019 under the administration of former President Ibrahim Mohamed Solih. During the repayment process, the Indian government’s Ministry of External Affairs noted that India absorbed approximately USD 45 million in interest costs over the five-year period as part of its ‘Neighbourhood First’ policy. Following the final payment, the Maldives Ministry of Finance and the Bank of Maldives (BML) issued clarifications regarding the source of the funds. They denied social media allegations that the repayment utilized public deposits or BML resources, confirming instead that the payment was funded through the Sovereign Development Fund (SDF). Recent reports highlight that the Maldives is facing a severe foreign-exchange crisis characterized by a shortage of US dollars, driven by a heavy external debt burden with USD 1.7 billion in debt service due in 2026. To assist with these financial challenges, India agreed on October 16, 2026, to roll over a 30 billion Indian rupee currency swap facility. This short-term financing mechanism, established through an agreement between the Reserve Bank of India and the Maldives Monetary Authority under the SAARC currency swap framework, was originally signed during President Mohamed Muizzu’s 2024 visit to India. The rollover aims to ease near-term external repayment pressures. Maldivian Foreign Minister Iruthisham Adam noted that the extension underscores the “deep-seated friendship and mutual respect” between the two nations. This move follows a credit rating upgrade by Moody’s, which moved the Maldives from Caa2 to Caa1, citing improved foreign currency buffers despite the nation remaining in a high credit risk category.

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