India is reportedly making ready to increase monetary help to the Maldives because the island nation faces its first potential sukuk default.
The Maldives, in keeping with a Bloomberg report, may instantly entry $400 million beneath the Reserve Bank of India’s (RBI) foreign money swap program, whereas extra long-term loans could also be sought beneath a $800 million line of credit score prolonged in 2019.
Though the Maldivian authorities has not but formally requested India’s assist, discussions are reportedly anticipated throughout President Mohamed Muizzu’s upcoming go to to India.
The potential support would help the Maldives in assembly exterior debt funds due subsequent month, notably amid rising issues of a potential default on its sukuk, an Islamic bond.
The Maldivian authorities just lately pledged to fulfill its obligations, which helped increase the sukuk’s worth from document lows.
Bloomberg reported that the Maldives faces a $25 million cost in October, a part of its $500 million sukuk debt. The Maldives Monetary Authority has confirmed that it’s in discussions for a $400 million foreign money swap with India, however India’s Ministry of External Affairs and different related our bodies haven’t commented on the matter.
BT couldn’t independently confirm these claims.
The financial challenges confronted by the Maldives have worsened in recent times. The nation’s debt has ballooned to 110% of its GDP as of March 2024, in keeping with the Observer Research Foundation, whereas international reserves have dwindled. At the top of August, the Maldives held $437 million in reserves, solely sufficient to cowl round six weeks of imports. With important exterior debt repayments due in 2025 and 2026, score company Moody’s just lately downgraded the nation’s credit standing additional into junk standing, citing a heightened danger of default.
Despite Muizzu’s election on an anti-India platform and a pledge to strengthen ties with China, India stays ready to help the Maldives. The rivalry between India and China for regional affect is ongoing, as seen in China’s latest settlement to develop the usage of native currencies with the Maldives. Meanwhile, the Maldives continues to grapple with its tourism-dependent financial system, which suffered after an Indian vacationer boycott final yr following diplomatic tensions.
