Maldives settles final $50 million treasury bill to State Bank of India after extension request denied

The Maldivian government has fully settled a $150 million budget support facility provided with the assistance of the Indian government, following the final repayment of a $50 million Treasury bill to the State Bank of India (SBI).

This facility comprises three Treasury bills, each valued at $50 million. Established in 2019, the arrangement involves the State Bank of India (SBI) investing in Maldivian government securities with the support of the Indian government. The maturity period for these bills has been consistently extended on an annual basis.

The government repaid the initial $50 million installment of this facility in January 2024. Following the settlement of the second installment on May 11 this year, the final payment was completed on September 17, successfully concluding the full repayment of the $150 million facility.

The Ministry of Finance stated that the most recent payment was made in accordance with the government's policy to settle sovereign debt obligations as scheduled. The Ministry further noted that discussions are ongoing with international financial institutions and bilateral partners to strengthen the Maldives' foreign currency reserves.

The repayment comes at a time when the Maldives' usable reserves are under significant strain. According to statistics from the Maldives Monetary Authority (MMA), while official reserves rose from $638 million at the end of July to $643.8 million by the end of August, usable reserves saw a decline. During the same period, usable reserves fell from $221.9 million to $200.6 million, marking a 9.6 percent decrease.

Since the August statistics predate the most recent $50 million payment, the subsequent impact of that transaction on the reserves is not yet reflected in the current figures.

Reports indicate that the recent $50 million payment to the State Bank of India (SBI) was made out of necessity after India declined to further extend the debt repayment deadline. Commenting on the situation, former President Mohamed Nasheed noted that this payment has caused a further decline in usable reserves, which could lead to difficulties in securing the funds required for the import of essential goods.

However, the Ministry of Finance stated that arrangements have been finalized to secure the foreign currency required for the importation of food, fuel, and medicine.

"Ensuring the uninterrupted supply of essential goods and services to the public remains a top priority for this administration," the Finance Ministry stated.

The Ministry further stated that claims suggesting debt repayment obligations could hinder the import of essential goods are entirely baseless.