The Indian government on Sunday handed over USD 250 million to Maldives as budgetary support to mitigate the economic impact of the ongoing COVID-19 pandemic, marking the largest single donor assistance extended to the island nation in history.
High Commissioner of India Sunjay Sudhir presented the symbolic cheque to Maldives' Minister of Foreign Affairs Abdulla Shahid, at a ceremony attended by Minister of Finance Ibrahim Ameer, State Bank of India (SBI) CEO Bharat Mishra, and officials from the foreign ministry, finance ministry and Indian High Commission.
In response to an urgent request made by President Ibrahim Mohamed Solih to Indian Prime Minister Narendra Modi, India extended the USD 250 million budgetary support without conditions, for the Maldivian government to utilise the funds in line with its own priorities for the country's economic recovery.
According to the foreign ministry and Indian High Commission, the financial support will be routed through subscription in the Maldivian government's Domestic Treasury bonds by SBI. The foreign ministry highlighted that in the form of Treasury Bonds, the financial assistance will be provided at favourable terms with significant relief for cash flow burden during the pandemic.
The Indian High Commission noted that the government of India provided a sovereign guarantee to SBI for this financial assistance. With a tenor of 10 years and low interest rate, the principal payment of the USD 250 million soft loan is due only at the end of 10 years, without imposing any immediate debt servicing liability with the exception of bi-annual interest payment.
"Maldives is the only country to which India has provided such assistance", the High Commission noted.
The $250 mil is the largest financial support package announced by a bilateral partner during #Covid19. With the $1.4 billion financial package announced in Dec 2018 &the cash grants for community projects, this is by far the largest single donor assistance Maldives has received pic.twitter.com/1zS7UA07NS
— Abdulla Shahid (@abdulla_shahid) September 20, 2020
Speaking at the ceremony, Foreign Minister Shahid hailed India as historically always being the first to respond to any crisis in Maldives.
He stated that the budgetary support would finance a part of the revenue gap caused due to the halt in the tourism sector, which is the backbone of the Maldivian economy. Shahid added that the financial assistance would also help to meet the immediate financial requirements faced by the government.
Finance Minister Ameer shed light on the repercussions of COVID-19 on the country’s finances, and stated that budgetary support would be utilised towards critical public service functions and coronavirus response packages.
Further highlighting the multiple donations and financial assistance extended by India to Maldives, Ameer added, "This is by far the largest single donor assistance we have received in history".
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