Maldives President Mohamed Muizzu’s state visit to India begins amidst a debt crisis. He plans to seek economic support, including a currency swap agreement, from Prime Minister Narendra Modi. With rising debt levels and urgent repayments nearing, this visit aims to strengthen India-Maldives ties while addressing critical fiscal challenges the Maldives currently faces.
On October 6, 2024, Maldives President Mohamed Muizzu arrived in New Delhi for a four-day state visit amid an escalating economic crisis and urgent debt obligations. During his visit, President Muizzu is set to engage in pivotal discussions with Prime Minister Narendra Modi to seek India’s assistance in alleviating the Maldives’ fiscal strains. It is anticipated that he will request a currency swap agreement and additional debt support during their meeting at Hyderabad House, following a ceremonial guard of honour at Rashtrapati Bhawan. In a pre-visit interview with an international broadcaster, President Muizzu expressed optimism regarding India’s readiness to assist, stating, “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.” The urgency for assistance arises as the Maldives faces a significant debt repayment of $25 million due October 8 and has an outstanding total of $114 million in debt for the year, along with about $1.5 billion owed over the next two years. After India’s State Bank announced a subscription to Maldivian government bonds worth $50 million in September—temporarily helping to avert immediate fiscal collapse—Mr. Muizzu is likely to emphasize the need for continued financial backing from India. He had previously secured a five-year deferment on loan repayments from China, another major creditor. The economic predicament in the Maldives has been compounded by external debt levels rising to approximately 110% of GDP, dwindling foreign exchange reserves around $440 million, and recent downgrades by credit agencies such as Moody’s and Fitch. Any failure to meet debt obligations could precipitate a crisis reminiscent of Sri Lanka’s economic turmoil in 2022. Preparations for President Muizzu’s talks included meetings with Indian officials such as External Affairs Minister S. Jaishankar and Foreign Secretary Vikram Misri. Officials indicate that mutual agreements regarding Indian infrastructure projects and security cooperation are likely to emerge from these discussions. Reflecting on the significance of this visit, Minister Jaishankar stated that President Muizzu’s talks with Prime Minister Modi would inject new momentum into India-Maldives relations, a sentiment echoed by the Maldives’ Foreign Minister Abdulla Khaleel in his remarks on social media. The visit is pivotal as it marks a stark shift from the prior period of strained relations, largely due to Mr. Muizzu’s electoral platform endorsing an ‘India Out’ campaign, after which tensions led to a decline in Indian tourist visits to the Maldives. Although there were initial delays due to a reshuffling within the Maldives’ cabinet, President Muizzu’s visit to India signifies both a strategic diplomatic approach and an imperative response to the growing economic challenges. Following discussions in Delhi, the president’s delegation plans to visit Agra, Mumbai, and Bengaluru on subsequent days.
This article discusses the significant diplomatic visit of Maldives President Mohamed Muizzu to India, underscoring the urgent need for financial assistance amid the Maldives’ economic distress. The context centers around the increasing debt burden in the Maldives, with imminent repayments due and a high debt-to-GDP ratio, raising concerns of a potential crisis similar to Sri Lanka’s. The backdrop of shifting political dynamics between India and the Maldives adds complexity, highlighting the recent easing of tensions and the reestablishment of cooperation after a period of strain under Muizzu’s administration.
President Mohamed Muizzu’s visit to India underscores the urgent need for financial support as the Maldives navigates a precarious economic landscape. With imminent debt repayments approaching, the discussions with Prime Minister Modi are pivotal for strengthening bilateral relationships and ensuring the stability of the Maldives’ economy. This visit marks a significant turning point in Maldives-India relations, shifting from past tensions towards a collaborative future focused on mutual development goals.
Original Source: www.thehindu.com
