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India extends US$250 mn support to Maldives amid Covid-19; routed through Treasury bonds subscription by SBI

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India extends 250 million dollars support to MaldivesThe whole globe is facing challenging situations arising due to COVID-19 which also include India’s maritime Border sharing partner Maldives. In order to reduce the economic and financial impact driven by COVID-19, the President of Maldives Ibrahim Mohamed Solih requested Prime Minister of India Narendra Modi for urgent financial aid. In this regard, on September 20, 2020, India provided a financial assistance of US$250 million(Indian Rupees of around 1837 crores) at favourable terms to the Government of Maldives in the form of symbolic cheque which was handed over by the High Commissioner of India Sunjay Sudhir to the Minister of Foreign Affairs Abdulla Shahid during an event held at the Ministry of Foreign Affairs, Maldives.

  • This financial support is provided through subscription in Maldives’ Government Domestic Treasury bonds by State Bank of India (SBI), Male (Maldives) so that it does not reflect in the external borrowings of the Maldives. 
  • This soft loan has 10 years tenure for repayment and a very low interest rate.
  •  It should be noted that it is the largest financial support package announced by a bilateral partner during this crisis, and Maldives is the only country to which India has provided such assistance.
  • This financial assistance was first announced by Union Minister Subrahmanyam Jaishankar, Ministry of External Affairs (MEA) during a virtual conversation with Maldivian Counterpart Abdulla Shahid in August 2020.

How will this aid be helpful to Maldives?

Tourism constitutes a third of the Maldives’ national revenue. This aid will not only provide significant relief for cash flow burden during the Covid19 crisis but also helps in financing a part of the revenue gap caused due to the halt in the tourism sector.

  • It will be utilised towards critical public service functions and Covid19 response packages.

How India helped Maldives at the time of COVID-19?

-In March 2020, a team of doctors and specialists visited the Maldives in March to assist in COVID-preparedness.

-In April 2020, consignment of 5.5 tonnes of essential medicines was donated.

-In May 2020, another consignment of 6.2 tonnes of medicines was airlifted from 4 Indian cities to Male by the Indian Air Force, and 580 tonnes of food aid was provided through Mission Security and Growth for All in the Region (SAGAR).

-India lifted export restrictions on medical consumables, respiratory apparatus, and testing kits and reagents for Maldives.

Maldives is the first neighbouring country with which an air bubble is being operationalized by India.

-Again, India will also send doctors and nurses recruited on short-term contracts to reinforce the health system in the Maldives in the battle against COVID-19.

Other Participants: The special ceremony was also attended by SBI Chief Executive Officer (CEO) Male Bharat Mishra and officials from the Ministry of Foreign Affairs, the Ministry of Finance and the High Commission of India in the Maldives.

Recent Related News:

  1. On August 5, 2020, India has extended the Line of Credit (LoC) worth US$18 million to the Government of Maldives for the expansion of fishing facilities at Maldives Industrial Fisheries Company (MIFCO) based in Felivaru, Lhaviyani Atoll, through the development of fish collection and storage facilities, and the setting up of a tuna cooked plant and fishmeal plant.
  2. On August 27, 2020, the government of Maldives launched India backed infrastructure projects viz. Hulhumale Central Park and renovation of the Arrival Jetty in Maldives during a ceremony which was attended by Foreign Minister Abdulla Shahid, Hulhumalé MP Ali Niyaz, High Commissioner Sunjay Sudhir, MD of Housing Development Corporation Limited (HDC) Suhail Ahmed and officials from the Ministry of Foreign Affairs of Maldives.

About Maldives:
Capital– Male
Currency– Maldivian rufiyaa