India extends financial assistance to Maldives ahead of President Muizzu’s visit

India has provided emergency financial assistance to the Maldives by renewing its subscription to the country’s government treasury bills, amounting to US$50 million for another year. This marks the second instance of such aid this year, signaling an effort to stabilize relations between the two nations.

This announcement coincides with the expected visit of Maldives President Mohamed Muizzu around October 7-8, 2024, and at a time when the Maldives faces a severe economic crisis, with declining revenues and depleted foreign currency reserves. This financial support from India underscores the importance of the bilateral relationship, despite recent tensions.

Renewed Support Amid Diplomatic Thaw

Tensions had escalated between India and the Maldives when President Muizzu came to power last year. His administration, fueled by an “India Out” campaign, called for the withdrawal of more than 85 Indian military personnel stationed in the Maldives to operate three aircraft. However, this recent renewal of financial support indicates a possible thaw in relations.

The Indian High Commission in Male stated that the State Bank of India (SBI) has subscribed to Maldivian treasury bills worth US$50 million for a period of one year, following the maturity of a previous subscription on September 19, 2024. In a similar move in May 2024, SBI had subscribed to treasury bills of the same amount, also at the request of the Maldivian government. These actions were taken as part of India’s emergency financial assistance to the archipelago.

India’s Commitment to Support the Maldives

According to the Indian High Commission’s statement, “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.”

India has maintained a strong interest in the Maldives, viewing it as a key maritime neighbor and a critical partner in the Indian Ocean region. The financial assistance and ongoing cooperation underscore the Maldives’ significance in India’s “Neighbourhood First” policy, which aims to strengthen ties with its closest neighbours.