The Indian government has provided budget support to the Maldives in the form of a rollover of USD 50 million Treasury Bill for an additional year.

The Indian government reportedly took the initiative at the request of Maldivian Foreign Minister Moosa Zameer.

"State Bank of India has subscribed for one more year the USD 50 million Government Treasury Bill, issued by Ministry of Finance of Maldives, upon maturity of the previous subscription. These Government Treasury Bills are subscribed by SBI under a unique Government-to-Government arrangement at zero-cost (interest free) to the Government of Maldives," the Indian High Commission in Madives said in a statement.

"The continuation of subscription has been made at the special request of the Government of Maldives to secure budgetary support from the Government of India," the statement said.

Speaking on the development, the Maldivian Foreign Ministry said: " Government of India’s decision to rollover the T-Bill came following a request to that effect made by Foreign Minister Moosa Zameer to India’s External Affairs Minister Dr. S. Jaishankar, during the official bilateral visit to India from 8-10 May 2024."

The government said: "The Government of Maldives is highly appreciative of the generous support that Government of India has been providing to the Maldives in the form of budgetary support."

The statement said: "Large number of infrastructural developmental projects and High Impact Community Developmental projects are underway with the assistance from the Government of India, which consists of a notable part as grant assistance."

Diplomatic tensions reached a flashpoint in recent times between the two countries over remarks made by some Maldives ministers against Indian PM Narendra Modi's visit to Lakshadweep, to promote the Indian Union Territory having the potential to compete with tourism major Maldives.

Pro-China Maldives President Mohamed Muizzu's People’s National Congress (PNC) took control of the Parliament by winning the election clinching over 60 of the total 93 seats, highlighting the Island Nation's further tilt towards India's hostile rival China.

The Maldives, which comprises some 1,192 tiny coral islands scattered across 800 kilometres (500 miles) on the equator, is considered as one of the top beach destinations in the world.

Apart from its scenic beauty, the country is known for its luxury hotels and water villas.

The pro-China Maldivian President faced massive domestic criticism for his anti-India stance as the main opposition parties of the country, the Maldivian Democratic Party (MDP) and the Democrats, slammed Muizzu for distancing from India, the island nation's "most long-standing ally" and source of tourists.

Besides expressing concern over the new foreign policy of Muizzu-led government in Maldives, the opposition parties took to the street in January in protest.