The ₹3,000-cr facility was recently released under the ‘Framework on Currency Swap Arrangement for SAARC Countries, 2024-2027’, said an official.
The currency swap arrangement allows the Maldives to access foreign exchange in times of liquidity stress without relying solely on commercial borrowings, helping it manage balance-of-payment pressures and maintain macroeconomic stability, according to the official.
The facility will support the Mohamed Muizzu government’s broader strategy to reinforce economic stability amid the evolving situation in West Asia, the Maldives foreign ministry said. It welcomed India’s continued support, calling the approval of the swap facility a testament to the enduring partnership between the two nations.
The Maldives has been grappling with an economic downturn, as highlighted by international credit agencies, which has been exacerbated by the Iran war. Tourist flows have reduced significantly and energy costs have gone up since the US-Israeli strikes on Iran began on February 28. The ability of the Maldives to raise further loans may be hampered in this situation.
Over the past several years, India has played a proactive role in providing short-term financial support to the Maldives, including through a $400 million currency swap facility in October 2024, which was rolled over two times despite stringent rules and requirements, as well as through rolling over of two interest-free $50 million treasury bills in May and September 2025 for an additional year. These were exceptional gestures for a close neighbour, said a person familiar with the matter.
A $565 million line of credit, aimed at building priority infrastructure, along with agreements to reduce annual debt servicing obligations for the Maldives was announced during PM Narendra Modi’s Male visit in July 2025.
In 2024, Fitch Ratings downgraded the Maldives’ sovereign credit rating to CC, citing heightened risks of default and structural economic vulnerabilities, including heavy external debt burden and fiscal pressure.