The India-China Debt Tightrope: Who Does the Maldives Really Owe?

The Maldives' total external debt stands at approximately $3.4 billion, a figure that has more than tripled in the past decade and now represents over 115% of GDP. The composition of that debt — who holds it, on what terms, and with what strategic strings attached — is one of the most consequential questions facing the nation. At its core lies the asymmetric relationship between the country's two largest bilateral creditors: China and India.

China is by far the larger creditor, holding approximately $1.3 billion in Maldivian sovereign debt accumulated primarily during the Yameen administration from 2013 to 2018. The bulk of this debt financed high-profile infrastructure projects including the Sinamalé Bridge, airport expansion, and housing developments. Crucially, much of the Chinese lending was contracted at near-commercial interest rates of 5 to 7%, with relatively short maturities of 15 to 20 years — terms significantly less favourable than those offered by multilateral institutions like the World Bank, which lends to the Maldives at rates below 2%.

India's direct lending exposure is far smaller at approximately $130 million, but New Delhi's strategic importance to Maldivian debt sustainability far exceeds this headline figure. India has provided critical liquidity support through a $200 million currency swap facility with the Reserve Bank of India, a $50 million Treasury bill subscription, and emergency budget support during periods of fiscal stress. These instruments provided the dollar liquidity that enabled the Maldives to meet its $500 million sukuk repayment in April 2026.

The geopolitical dimension of the debt landscape cannot be separated from the financial one. China's lending has given Beijing significant leverage over Maldivian foreign policy, while India's emergency facilities create a different kind of dependency. For ordinary Maldivians, the practical consequence is that roughly 28 cents of every rufiyaa collected in tax revenue now goes to servicing debt rather than funding schools, hospitals, or housing. Understanding who holds that debt — and what they expect in return — is essential to understanding the choices the Maldives will face in the years ahead.