India has once again sent significant aid to the Maldives during this crisis. According to reports, India has approved the release of the first tranche of ₹30 billion, providing relief to the Maldives, which is facing financial hardship. This amount is being provided under the SAARC Currency Swap Framework between the Reserve Bank of India and the Maldivian government. The Indian High Commission in Male confirmed this on Thursday, stating that this step is crucial to maintaining the Maldives’ financial stability.
The Currency Swap Framework was implemented under an agreement between the Reserve Bank of India and the Maldivian government. The two countries signed this agreement during Maldivian President Mohamed Muizzu’s visit to India in October 2024. The Maldives has previously utilised $400 million under this framework.
Maldives in Crisis
The Maldives economy is facing challenges on many fronts. Foreign exchange reserves are on the verge of depletion. At the same time, due to the growing debt burden and limited revenue sources, the government is constantly in need of external assistance. In such a situation, this assistance from India not only provides immediate relief but will also support the Muizzu government in the future.
India has been helpful.
India has long been a trusted partner for the Maldives and has been among the first to assist in times of crisis. Since the launch of the SAARC Currency Swap Framework in 2012, India has provided financial assistance of over $1.1 billion to the Maldives. Furthermore, last year, India rolled over $100 million in treasury bills at the Maldives’ request, which helped alleviate immediate financial pressure.
What is the SAARC Currency Swap Framework?
The SAARC Currency Swap Framework serves as a vital safety net for South Asian countries, providing immediate access to foreign exchange when needed. This helps manage balance-of-payments crises and import and export pressures, for small island countries like the Maldives, which are heavily dependent on tourism and imports; such arrangements play a vital role in maintaining economic stability.
