News Desk
MALE’, Maldives — In a significant move last October, India extended a $400 million currency swap to the Maldives that has proven critical in stabilizing the country’s foreign exchange reserves, according to a June 12, statement from the Ministry of Finance and Planning.
The swap facility, agreed upon by the Reserve Bank of India (RBI) and the Maldives Monetary Authority (MMA), helped avert what Fitch Ratings called “imminent external liquidity strains” in its June 2025 update. The agency reaffirmed the Maldives’ sovereign credit rating at ‘CC,’ citing improved foreign reserves as a key factor.
India’s financial support comes as the Maldives navigates a challenging external environment, with high debt servicing costs and fluctuating global tourism revenues. The Ministry’s statement credited the currency swap, alongside increased tourism and new revenue measures, with lifting official reserves to $856.3 million by April 2025.
The swap, part of the SAARC Currency Swap Framework, was designed to help smaller South Asian economies manage temporary balance-of-payment pressures. For the Maldives, the timing was critical. The Ministry noted that the foreign currency gains have supported a “steady rise in reserves,” helping the government avoid a full-blown crisis.
Officials in New Delhi have pointed to the Maldives as a case study in effective regional economic cooperation, emphasizing the role of bilateral financial tools when paired with domestic reforms. The Maldivian government echoed this, stating that fiscal and monetary reforms—including new revenue measures, budget rationalization, and support for renewable energy—are part of a strategy to lower the debt-to-GDP ratio and strengthen macroeconomic stability.
India’s assistance, though technical, underscores New Delhi’s role as a key economic partner for its Indian Ocean neighbor. At a time of shifting geopolitical alignments and complex regional dynamics, India’s contribution to stabilizing the Maldivian economy demonstrates its commitment to supporting South Asia’s emerging and vulnerable economies.
