India to offer Maldives US$250 million loan to recover from coronavirus

A sale of treasury bonds issued by the Maldives government to the State Bank of India will raise the money, with 10 years given for repayment
The loan takes India’s total pledged financial assistance to Maldives to more than US$2 billion since 2018, its foreign ministry says

Maldives

Agence France-Presse

Published: 9:42pm, 20 Sep 2020

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India on Sunday announced a US$250 million loan to the Maldives to boost its coronavirus-battered economy in a further bid to counter China’s growing financial footprint in South Asia.

The Indian Ocean archipelago, renowned for its luxury resorts, has been badly hit by the pandemic, with foreign tourists failing to flock back in large numbers after international flights restarted in mid-July.

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India’s High Commission in the Maldives said the loan was being provided after a request by Maldives President Ibrahim Mohamed Solih for “financial assistance to overcome the difficult economic situation”.

“The Maldives is at liberty to use the money in repairing the domestic economic situation in line with its own priorities,” it said in a statement.

A health worker on his way to collect samples for Covid-19 testing in Male, Maldives. Photo: AP

A sale of treasury bonds issued by the Maldives government to the State Bank of India (SBI) will raise the money, with 10 years given for repayment, the statement added.

The assistance follows a US$500 million pledge by New Delhi in August to help build bridges and causeways in the nation of 1,192 islands located on major East-West shipping lanes.

Under former president Abdulla Yameen’s administration, which was ousted in 2018 elections, the Maldives borrowed some US$1.4 billion from Beijing for expensive infrastructure projects, according to Solih’s government.

The Sinamale Bridge, formerly known as the China-Maldives Friendship Bridge, in Male. Photo: AFP

The loans added to critics’ concerns that Chinese aid in Asia and beyond was saddling countries with unsustainable debts while expanding Beijing’s sphere of influence.

The bond takes New Delhi’s total pledged financial assistance to the Maldives to over US$2 billion since Solih came to power, according to India’s foreign ministry.

The country, which still has a nighttime curfew in place to combat the virus, has recorded more than 9,600 infections and 33 deaths from Covid-19.

The Asian Development Bank forecasts the Maldives’ economy to contract by 20.5 per cent this year, compared to growth of 5.9 per cent last year.

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