India Provides Soft Loan of $250 Million to the Maldives

India on Sunday provided a soft loan of $250 million to the government of the Maldives as budgetary support to mitigate the economic impact of the Covid-19 pandemic, the latest in a string of support measures for the Indian Ocean archipelago.

The aid was welcomed by the Maldives’ foreign minister Abdulla Shahid, who said it would help bridge the revenue gap and meet his government’s immediate needs. The Covid-19 pandemic has had a massive impact on the tourism industry, the mainstay of the Maldives’ economy.

The financial aid, first announced during a virtual meeting between Shahid and his Indian counterpart S Jaishankar on August 13, was handed over at a ceremony in the Maldives’ foreign ministry attended by Shahid, finance minister Ibrahim Ameer, Indian envoy Sunjay Sudhir and senior State Bank of India official Bharat Mishra.

Shahid, who spoke in Hindi at the event, said: “The whole world has been confronted by an unprecedented challenge, an unseen enemy, a threat we can’t disregard, a virus that has stopped operations by the world’s airlines, and forced all countries to make difficult decisions. It is a pandemic that forced us to close our borders and our homes.

“But our friends, as always, have proved this pandemic couldn’t get them to close the doors to their hearts. Even at this difficult time, India has been our great friend.”

Shahid also tweeted: “Grateful to receive the USD 250 million financial assistance from India to the Maldives today. The financial assistance provided through subscription in GoM Domestic Treasury Bonds by SBI will support the financing of the revenue gap, and meet the Gov’s immediate financing needs.”

The Indian side said the budgetary support was provided in response to a request by President Ibrahim Solih to Prime Minister Narendra Modi for assistance to overcome the difficult economic situation. The soft loan has a very low interest rate and can be repaid over 10 years, said a statement from the Indian mission in Male.

The loan is “extended without conditions” and the Maldives is “at liberty to use the money in repairing the domestic economic situation in line with its own priorities”, the statement said. The aid is “being routed through SBI, Male so that it does not reflect in the external borrowings of the Maldives” and the Indian government has provided a sovereign guarantee to SBI for the loan.

“Since the principal payment is due only at the end of 10 years, it will not put any immediate debt servicing liability other than bi-annual interest payment. Maldives is the only country to which India has provided such assistance,” the statement said.

During the meeting of the two foreign ministers on August 13, India also unveiled a $500-million package to help the Maldives build a connectivity project linking its capital Male with three islands.

As part of measures to counter Covid-19, India will send doctors and nurses recruited on short-term contracts to reinforce the health system of the Maldives. Over the past few weeks, a total of 500 Maldivians patients travelled to India in eight batches for treatment.

A team of Indian doctors and specialists visited the Maldives in March to assist in Covid-19 preparedness and two consignments of 11.7 tonnes of medicines were provided in April and May. India also lifted export restrictions on medical supplies, respiratory apparatus, test kits and reagents and maintained the supply of essential commodities to the Maldives.

Source: HT