India Extends Tenure of 30 Billion Rupee Currency Swap Facility to Support Maldives

In a move designed to bolster the island nation's financial stability, the Reserve Bank of India (RBI) has officially extended the tenure of the 30 billion rupee ($319 million) currency swap facility provided to the Maldives.

According to an official statement issued by the High Commission of India in the Maldives, the extension was granted to further assist the Maldivian government in managing its short-term liquidity needs.

The Maldives Monetary Authority (MMA) initially drew down the swap facility on April 23 of this year. Typically functioning as a three-month short-term financing arrangement, currency swap facilities of this nature have historical precedent for extensions—having previously been stretched to six-month tenures to accommodate government cash flow requirements.

This financial mechanism stems from a broader bilateral agreement finalized during President Dr Mohamed Muizzu’s official state visit to India in 2024, wherein New Delhi agreed to extend a comprehensive economic support package comprising USD 400 million and INR 30 billion.

The extension arrives amid a backdrop of active debt servicing and settlement by the Maldivian government. Earlier this year, the administration successfully repaid a separate USD 400 million currency swap and cleared a USD 50 million Treasury bill issued by the Indian government last September.

According to the Ministry of Finance, these repayments mark the complete clearance of a USD 150 million debt acquired across three tranches from the Indian government in 2019. Highlighting the cooperative nature of the financing, the Indian High Commission noted that the Indian government absorbed the interest payments on those three T-bills, amounting to USD 43 million.

Beyond the currency swaps and T-bills, the bilateral financial portfolio includes two long-term Treasury bond facilities valued at USD 250 million and USD 100 million, respectively.

Financial analysts note that the timely extension of the RBI currency swap provides a crucial buffer for the Maldivian economy. Official figures indicate that the state reserves stood at USD 547 million at the close of last September, and short-term financing facilities like the Indian currency swap continue to play a vital role in reinforcing national reserves.