President Mohamed Muizzu of the Maldives is in New Delhi for a four-day official visit to seek support from Prime Minister Narendra Modi regarding a looming debt crisis. The Maldives faces critical economic challenges, including significant debt repayments and lowering foreign reserves. Muizzu hopes to secure currency swap arrangements and debt relief from India to stabilize the nation’s fiscal situation after previously strained diplomatic relations. The meetings are expected to yield memoranda of understanding on various cooperative initiatives.
Maldives President Mohamed Muizzu arrived in New Delhi on October 6, 2024, for a four-day official visit, during which he will meet with Prime Minister Narendra Modi on the upcoming morning of October 7, 2024. The president comes to India amid significant economic challenges, including urgent debt obligations that his government must address. In a pre-visit interview, President Muizzu expressed his hope that India would assist in alleviating the financial strain on the Maldives, seeking support through a currency swap arrangement and further debt relief during the planned discussions at Hyderabad House. Upon arriving, President Muizzu will receive a ceremonial guard of honour at Rashtrapati Bhawan. President Muizzu stated, “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.” In a proactive approach, India had previously announced that the State Bank of India would purchase $50 million worth of Maldivian government bonds to avert an immediate crisis. The Maldivian president is also expected to address his country’s critical debt situation, including a forthcoming $25 million payment towards its $500 million Sukuk debt, amidst claims that China has deferred its loan repayments for a period of five years. The Maldives faces a daunting total of $1.5 billion in payments over the next two years, heightened by a deteriorating economic environment, marked by a debt-to-GDP ratio nearing 110% and dwindling foreign exchange reserves currently estimated at $440 million. Recent downgrades from both Moody’s and Fitch have raised alarms regarding potential defaults, alarming the international community with fears that the Maldives could suffer a financial crisis similar to that of Sri Lanka in 2022. Prior to the discussions, External Affairs Minister S. Jaishankar, along with Foreign Secretary Vikram Misri, engaged with President Muizzu to set the stage for their talks, which are anticipated to yield outcomes possibly including memoranda of understanding regarding Indian infrastructure initiatives, security collaborations, and further bilateral agreements. Jaishankar acknowledged in a social media message that President Muizzu’s engagement with PM Modi would inject new momentum into India-Maldives relations, while Abdulla Khaleel, the recently appointed Foreign Minister of the Maldives, noted that such meetings aim to strengthen the enduring friendship between the two nations, although specific details of the discussions were not disclosed. This visit marks a notable shift in the diplomatic landscape, following previous tensions provoked by Muizzu’s electoral platform that called for enhanced national sovereignty, particularly the withdrawal of Indian military personnel. His earlier foreign visits have included Turkey, the UAE, and China, rather than India—the traditional ally. However, recent diplomatic efforts have resulted in improved relations, with the Modi administration having completed the military withdrawal that had previously strained ties. With the appointment of a new finance minister following a cabinet reshuffle, strides toward fostering cooperation appear more promising as the president’s delegation plans further travel to Agra, Mumbai, and Bengaluru during his visit.
The Maldives is facing a severe economic crisis characterized by increasing debt levels, a significant public debt-to-GDP ratio, and depleting foreign currency reserves. The government has imminent debt obligations including Islamic bond payments, and previous financial support from India has been critical in avoiding immediate collapse. This visit by President Muizzu is crucial for securing additional assistance from India, amidst shifting diplomatic relationships influenced by national sovereignty sentiments in the Maldives.
In conclusion, President Muizzu’s visit to India is critical as he seeks urgent support in navigating his nation’s impending economic crisis. With debt obligations looming and a history of strained relations, the outcome of his discussions with Prime Minister Modi may significantly impact the future trajectory of India-Maldives relations, particularly in terms of economic collaboration and mutual support.
Original Source: www.thehindu.com
