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By Ibrahim H. Shihab/Maldives Republic
Male, September 14: The Indian government is ready to assist the Maldives with financial support as the risk of the first sukuk default looms, India’s Economic Times (ET) has reported, citing “people familiar with the matter.”
The ET quoted an Indian government official—who asked not to be named before a final decision was forthcoming—as saying that the Maldives could immediately avail itself of the US$400 million available under the Reserve Bank of India’s (RBI) currency swap programme, which is open to regional countries.
The Maldives Monetary Authority (MMA) had, last month, confirmed it had been working on a US$400 million currency swap agreement with India.
In addition, the Maldives could also seek long-term assistance through a US$800 million line of credit originally extended during the Ibrahim Mohamed Solih administration in 2019, Indian government sources are quoted as confirming to the ET.
While it is unclear whether bilateral negotiations have taken place, the matter is likely to be discussed when President Mohamed Muizzu visits India in the coming weeks, the paper discerned.
According to Bloomberg, the Maldives is currently facing a US$25 million payment on its approximately US$500 million outstanding sukuk due in October. Speculation earlier in the month that the nation was dangerously close to defaulting on the payment had caused the value to plummet. The sukuk, however, rallied after Minister of Finance Mohamed Shafeeq made public assurances that there would be no difficulty in making the US$25 million payment due in October.
The Maldives’ reserves currently stand at US$444 million, with usable reserves at US$61 million; meaning reserves barely cover a month of imports.
While total state debt is expected to reach MVR 129 billion this year, the nation will have to make significant debt payment over the next two years.
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– NewsIn.Asia.
