The assistance will shore up liquidity, ease exchange rate fluctuations and provide the much-needed budgetary support to the Govt of Maldives and help mitigate the impact of the economic crisis caused by COVID-19.
The budgetary support is in response to the request made by the Maldivian President Ibrahim Solih to PM Modi for financial assistance to overcome the difficult economic situation in the Maldives.
It is being provided under the most favourable terms and through a Treasury Bond sale to the State Bank of India (SBI), Male. The Government of India has provided a sovereign guarantee to the SBI for this financial assistance. The soft loan has a comfortable tenor of 10 years and a very low interest rate. Since the principal payment is due only at the end of 10 years, it will not put any immediate debt servicing liability other than bi-annual interest payment. Maldives is the only country to which India has provided such assistance.
A handover ceremony of the assistance was held at the Ministry of Foreign Affairs in Maldives in the presence of Foreign Minister Abdulla Shahid, Finance Minister Ibrahim Ameer, Indian High Commissioner Sunjay Sudhir and CEO, SBI, Male Bharat Mishra.
The budgetary support of USD 250 million is extended without conditions which mean Maldives will have the liberty to use the money in repairing the domestic economic situation in line with its own priorities. Moreover, the financial assistance is being routed through SBI, Male so that it does not reflect in the external borrowings of the Maldives.
Since the outset of the Covid Pandemic, India has maintained the supply of essential commodities to the Maldives despite global supply disruption. A team of doctors and specialists visited Maldives in March to assist in COVID-preparedness. India also donated a consignment of 5.5 tons of essential medicines in April. Another consignment of 6.2 tons of medicines were airlifted from 4 Indian cities to male by the Indian Air Force, and 580 tons of food aid including food grains, onions, etc were donated to the people of Maldives in May.
India is also going to send doctors and nurses recruited on short-term contracts to reinforce the health system in the Maldives in the battle against COVID-19. The latest budgetary assistance showcases the resilience and reliability of the India-Maldives relationship. India’s Neighbourhood First policy and Maldives’ India First policy have worked in tandem during the COVID-19 pandemic to safeguard the well-being of the common peoples.
Report by Abhishek Jha