The Reserve Bank of India has agreed to roll over a USD 320 million bilateral currency swap facility extended to the Maldives Monetary Authority, providing essential balance-of-payments relief as the island nation navigates foreign exchange constraints and impending sovereign debt repayments.
Diplomatic and financial officials confirmed the rollover agreement on Wednesday, noting that the arrangement formalizes financial commitments reached during President Dr Mohamed Muizzu’s recent state visit to New Delhi.
Liquidity support and reserve stability
The currency swap arrangement, established under the South Asian Association for Regional Cooperation (SAARC) framework, allows the central bank to access foreign currency liquidity to stabilize the Maldivian Rufiyaa and ensure uninterrupted payments for vital imported goods, including petroleum, pharmaceuticals, and staple foods.
Under the agreed terms, the debt repayment deadlines for two separate swap tranches totaling USD 320 million will be extended, granting the MMA flexibility to replenish official foreign exchange reserves:
"The rollover of the currency swap facility by the Reserve Bank of India underscores the enduring strength of our bilateral economic partnership and provides immediate stability to our financial reserves," a senior finance official confirmed.
Financial analysts noted that the rollover averts an imminent drawdown on the state’s gross reserves, which faced pressure from commercial debt service obligations due in the final quarter of the year.
Broader bilateral economic coordination
The rollover follows parallel bilateral initiatives between Malé and New Delhi aimed at easing foreign trade settlements, including advanced technical discussions to establish direct Indian Rupee (INR) and Maldivian Rufiyaa commercial invoicing mechanisms.
The Ministry of Foreign Affairs noted that high-level economic dialogue continues to progress on a proposed bilateral Free Trade Agreement and sovereign infrastructure financing through line-of-credit facilities. The government reiterated that prudent expenditure controls and debt restructuring partnerships remain central to preserving macroeconomic stability.