Maldives Clears Second USD 50 Million Indian Treasury Bill Amid Debt Reduction Push

The Maldives has repaid a second USD 50 million treasury bill issued to India, President Mohamed Muizzu announced on Monday, as his government continues efforts to reduce the nation’s external debt obligations.

The treasury bills were originally subscribed to by the State Bank of India (SBI) in 2019 to help the Maldives manage budget deficits and short-term financial pressures. According to Muizzu, the previous administration repeatedly rolled over the bills each year instead of repaying them at maturity.

Speaking during a press conference, the Maldivian President stated that his government had already cleared one USD 50 million treasury bill in January 2024, while the second repayment was completed this week. He also noted that another treasury bill repayment is expected in September.

Muizzu said the repayments have helped the country avoid what he described as a “USD 150 million debt trap” created by the earlier administration.

India has extended financial assistance to the Maldives through treasury bills and other support measures since 2019. These interest-free rollovers provided relief to the island nation during periods of foreign exchange shortages and fiscal stress.

Treasury bills are short-term government debt instruments used by governments to raise funds for immediate financing requirements. In the Maldives’ case, India’s assistance through SBI played a key role in stabilising the country’s economy during challenging periods.