India has played a crucial role in supporting the Maldives during its current period of severe financial stress. The Maldivian economy has been facing a mounting debt crisis, with dwindling foreign exchange reserves and substantial external debt payments—USD 600 million due in 2025 and as much as USD 1 billion by 2026—posing significant risks to its economic sovereignty.

In response, India has extended comprehensive financial assistance, including a nearly fully utilised USD 400 million currency swap line and a bilateral currency swap agreement worth ₹30 billion. Additional support has come through the rolling over of a USD 50 million treasury bill in May 2024 and repeated subscriptions by the State Bank of India to Maldivian treasury bills.

Foreign Secretary Vikram Misri has highlighted that India’s financial interventions have bolstered the Maldives’ foreign exchange reserves at a critical time, a factor favourably cited by international organisations such as the IMF as key to averting potentially adverse outcomes for the archipelago’s economy.

This support is part of a broader, resilient partnership between India and the Maldives, which persists despite periods of diplomatic strain—most notably following derogatory remarks by Maldivian officials about Indian Prime Minister Narendra Modi in early 2024. Both nations have since taken diplomatic steps to resolve such issues and reaffirm their partnership.

Beyond emergency financial aid, India continues to be a major development partner for the Maldives, providing more than a billion dollars over the past decade for projects including the flagship Greater Malé Connectivity Project and initiatives in roads, airports, fisheries processing, social housing, and capacity building.

Bilateral trade is close to USD 500 million, with significant Indian investments in tourism and other sectors. The two countries are currently engaged in discussions to negotiate a free trade agreement and an investment treaty; expanding cooperation into new areas such as renewable energy, fisheries, and even digital payments for tourism.

India’s multifaceted support has been pivotal for the Maldives’ financial stability, enabling it to stave off the immediate threat of debt default and maintain critical economic functions. Ongoing discussions and regular high-level visits, including Prime Minister Modi’s participation as guest of honour for the Maldives’ 60th Independence anniversary in July 2025, underscore India’s commitment to a stable and prosperous Maldives and the resilience of bilateral ties in the face of economic and diplomatic challenges.

Based On ANI Report