India provides soft loan of $250 mn to the Maldives

A handover ceremony was held on Sunday at the Ministry of Foreign Affairs, Government of Maldives to mark the occasion in the presence of Foreign Minister Abdulla Shahid, Finance Minister Ibrahim Ameer, High Commissioner Sunjay Sudhir and CEO, SBI, Male Bharat Mishra.

“The budgetary support was a response to the request made by President Solih to Indian Prime Minister Narendra Modi for financial assistance to overcome the difficult economic situation in the Maldives. It is being provided under the most favourable terms possible to the Government of Maldives,” the Indian Embassy in Male said.

The financial assistance was announced first during a virtual meeting between External Affairs Minister S Jaishankar and provided through a Treasury Bond sale to the State Bank of India (SBI), Male which has a tenure of 10 years for repayment.

To recall, India had provided substantial and continued assistance to the Maldives during the pandemic. A team of doctors and specialists visited Maldives in March to assist in Covid-preparedness, a consignment of 5.5 tons of essential medicines were donated 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 foodgrains, onions, among others were donated to the people of Maldives in May.

In addition, India continuously lifted export restrictions on medical consumables, respiratory apparatus, and testing kits and reagents throughout the pandemic to assist Maldives in its battle against Covid-19.

India also maintained the supply of essential commodities to the Maldives despite global trade disruptions.

500 Maldivians in 8 batches of Maldivian patients travelled to India in the past few weeks.

On their request, India will also send doctors and nurses recruited on short-term contracts to reinforce the health system in the Maldives in the battle against Covid-19.

The India-Maldives partnership is unique, and the pandemic has highlighted this. India will continue to stand by the people and Government of Maldives during these difficult times, it said.

The budgetary support of $250 million is extended without conditions; the Government of Maldives is at liberty to use the money in repairing the domestic economic situation in line with its own priorities.

Secondly, the financial assistance is being routed through SBI, Male so that it does not reflect in the external borrowings of the Maldives.

The Government of India has provided a sovereign guarantee to SBI for this financial assistance.

The soft loan of $250 million 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.

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 our peoples. “Today, is another milestone in our historic ties that have expanded in scope and risen in ambition in the recent past.,” it added.