Maldives President Mohamed Muizzu has arrived in New Delhi for a four-day state visit, where he is set to meet with Prime Minister Narendra Modi to discuss economic support amid a looming debt crisis. President Muizzu seeks India’s assistance via currency swaps and debt support, reflecting the urgency of the Maldives’ financial challenges characterized by high debt-to-GDP ratios and declining foreign reserves. This visit, a shift from previous tensions in bilateral relations, aims to strengthen cooperation between the two countries.
On October 6, 2024, Maldives President Mohamed Muizzu arrived in New Delhi to commence a four-day state visit to India. His schedule includes an anticipated meeting with Prime Minister Narendra Modi on October 7, during which he is expected to seek assistance regarding his nation’s economic challenges and impending debt obligations. In an advance interview, President Muizzu expressed optimism that India would consider measures to alleviate the economic strain on the Maldives, specifically through discussions surrounding currency swaps and debt support during their talks at Hyderabad House, following a ceremonial guard of honour at Rashtrapati Bhawan. President Muizzu remarked, “India is fully cognizant of our fiscal situation, and as one of our biggest development partners, will always be ready to ease our burden, find better alternatives and solutions to the challenges we face.” Furthermore, India recently pledged its support by committing to purchase Maldivian government bonds valued at $50 million, helping avert an immediate crisis. With obligations to repay a significant amount of debt, including a forthcoming $25 million payment on October 8 concerning Islamic bonds, the urgency for support is palpable as the Maldives grapples with a burgeoning external debt of approximately $1.5 billion and a concerning debt-to-GDP ratio of around 110%. The Maldivian administration is concurrently managing challenges posed by decreasing foreign exchange reserves and the recent downgrading of the nation’s credit rating by agencies such as Moody’s and Fitch. This situation parallels the economic collapse experienced by Sri Lanka in 2022, raising the stakes of any potential default. Accompanying President Muizzu in discussions will be External Affairs Minister S. Jaishankar, Foreign Secretary Vikram Misri, and other key officials, who are preparing to address topics related to infrastructure development, security collaboration, and broader bilateral cooperation. In a social media statement, Minister Jaishankar expressed confidence that the discussions would revitalize India-Maldives relations. This visit marks a noticeable shift in diplomatic relations, moving away from previous tensions heightened by an “India Out” campaign led by President Muizzu during his election campaign. Despite earlier reservations, including delays in his first official visit overseas, which included stops in Turkey, the UAE, and China, the normalization of relations between India and the Maldives has progressed, particularly following the withdrawal of Indian military personnel from the Maldives—a critical point of contention. Additionally, President Muizzu’s recent cabinet reshuffle, which included the appointment of a new Finance Minister, underscores the administration’s adaptability in navigating its economic difficulties. Following Delhi, the presidential delegation plans to visit key cities, including Agra, Mumbai, and Bengaluru.
The Maldives, an island nation in the Indian Ocean, is currently facing a significant economic crisis, marked by an escalating debt situation. With a substantial portion of its financial obligations to international creditors and a high debt-to-GDP ratio, the urgency for external financial support has intensified. Relations between the Maldives and India, traditionally strong, have experienced turmoil due to political shifts and public sentiment against foreign military presence. The recent election of President Muizzu, whose campaign was based around reducing Indian influence in the Maldives, highlights the delicate balance of bilateral relations amidst domestic pressures and economic realities. The Maldivian government is actively seeking assistance from India, one of its largest development partners, as it navigates an impending crisis with looming debt repayments.
In conclusion, President Mohamed Muizzu’s state visit to India represents both an opportunity and a challenge as he seeks critical support to alleviate the economic burdens affecting the Maldives. The discussions with Prime Minister Modi are likely to yield agreements that could foster bilateral cooperation while assisting the Maldives in managing its significant debt crisis. The evolving dynamics between India and the Maldives, marked by previous tensions and a recent thaw in relations, will be closely watched as both nations work towards rebuilding their partnership.
Original Source: www.thehindu.com
