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India lent the Maldives enough funds for its upcoming Islamic bond payments, easing a default risk for the island nation in the near-term.
The South Asian country gave the Maldives another $50 million loan for emergency financial assistance, the High Commission of India in Maldives said in a statement on X Thursday. The State Bank of India, the nation’s largest public lender, subscribed to Treasury bills issued by the Maldives for another year, following a similar aid in May.
“These subscriptions have been made at the special request of the Government of Maldives as emergency financial assistance,” India said, adding the loan “has been made at zero-cost (interest-free).”
India’s help to the country comes amid investors’ worries over a potential sukuk default, which would be the world’s first. The Maldives has about $500 million in outstanding sukuk debt due in 2026, according to data compiled by Bloomberg. The assistance will help soothe nerves as the next coupon payment of $24.6 million is due Oct. 8, followed by a smaller one on Oct. 26.
The aid underscores India’s attempt to gain influence in the region following tensions in their ties earlier this year. Maldives President Mohamed Muizzu had come into power last year on an anti-India platform, pledging to foster stronger ties with China, the biggest lender to the country.
The Maldives Monetary Authority said last month that it is working on signing an agreement for a $400 million currency swap arrangement with India. India is ready to offer support and the matter is likely to be discussed during Muizzu’s visit to India in coming weeks, Bloomberg News reported last week.
--With assistance from Santosh Kumar and Finbarr Flynn.
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