Maldives Faces USD 50 Million India Repayments as Nasheed Warns of Reserve Pressure and Cross-Default Risks
The Maldivian government faces a deadline to repay a USD 50 million Treasury bill held by the State Bank of India (SBI), with former president Mohamed Nasheed warning that the payment could place additional pressure on the country’s usable foreign-exchange reserves and raising concerns over potential cross-default consequences.
In a statement published on X, the current chairperson of MDP Mohamed Nasheed said that the Treasury bill was due to mature on Thursday. He argued that settling the obligation from central bank reserves would reduce the foreign currency available to support imports of essential goods, including food, fuel and medicines.
The Maldivian government is required to repay a USD 50 million bond owed to the Indian government by the end of today. The Maldives central bank's usable reserves are expected to fall sharply from tomorrow. The government will not have enough foreign currency to pay for staples,…
— Mohamed Nasheed (@MohamedNasheed) September 16, 2026
Nasheed also warned of wider financial consequences if the payment were not made on time. He said a default on the Indian facility could potentially activate cross-default provisions in other Maldivian sovereign debt instruments, including the country’s Sukuk.
Most Maldivian sovereign bonds have cross-default clauses. A default to one official creditor can trigger demands for early repayment from private creditors, including the holders of the other international bonds/sukuk. What would actually happen if India T-Bill is missed?
— Mohamed Nasheed (@MohamedNasheed) September 16, 2026
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Nasheed further said a default could result in credit-rating consequences, including a possible classification of the Maldives as being in Restricted Default. Any such rating action, however, would be a decision for the relevant credit-rating agencies and would depend on their assessment of the circumstances.
The US$50 million Treasury bill is the final instalment of a USD 150 million short-term budgetary assistance facility extended by India in 2019.
The facility was structured through three separate USD 50 million Treasury bills subscribed by SBI. The arrangement provided financial support to the Maldivian government, with the instruments subject to agreed maturity and rollover arrangements.
The first USD 50 million tranche was settled in January 2024 after reaching maturity.
India subsequently granted one-year extensions on the remaining Treasury bills in May and September 2024. President Mohamed Muizzu publicly expressed appreciation to Indian Prime Minister Narendra Modi for the support during high-level discussions between the two countries.
The second USD 50 million tranche was subsequently repaid in May 2026, leaving the final USD 50 million bill due on 17 September.
The wider bilateral financial relationship has also included cooperation through a currency-swap arrangement. In his 2026 Presidential Address, President Muizzu said India had waived a condition requiring the Maldives to enter an International Monetary Fund programme as part of the arrangement and had agreed to roll over the facility.
The repayment deadline comes as the Maldives continues to manage pressure on its foreign-exchange position.
According to data from the Maldives Monetary Authority (MMA), official reserve assets rose 0.9 per cent to USD 643.8 million in August 2026, up from USD 638 million in July, though below the USD 686.8 million recorded in June. Meanwhile, net usable reserves, representing liquid funds available for essential imports, decreased by 9.6 per cent from USD 221.9 million in July to USD 200.6 million at the end of August.
The Maldives is heavily dependent on imports for food, fuel, medical supplies and other essential goods. Importers therefore rely on access to US dollars through the domestic banking system to settle payments to overseas suppliers.
