Muizzu meets Modi a year after ‘India Out’ chant: How bad is Maldives’ economy in 9 points

Maldives President Mohamed Muizzu, who is on a four-day India visit, on Monday held an extensive discussion with Prime Minister Narendra Modi on repairing and strengthening bilateral ties which hit a new low last year.

Pro-China politician Muizzu, who assumed office in November last year, is making his first state visit to India. He rode to power on an ‘India Out’ election election promise and assured to remove Indian troops deployed in the archipelago.

Also, unlike his predecessors, who made the first port of call to New Delhi after assuming office, Muizzu travelled to Turkey and then to China for his first state visit, delaying his India visit.  

On Monday, PM Modi received Muizzu at Hyderabad House. The India visit of the Maldives President comes at a time when his country is grappling with a serious downturn.

During the meeting, the initiative of using RuPay card in Maldives was launched which will be beneficial for Indian tourists visiting the country considered to be a luxury holiday destination with pristine white sand beaches and secluded resorts.

🇮🇳-🇲🇻| A partnership fulfilling shared aspirations!

PM @narendramodi and President @MMuizzu held comprehensive discussions to further deepen ties on a range of areas including development partnership, energy, trade, financial linkages and defence cooperation. pic.twitter.com/TcvMowZE5F

— Randhir Jaiswal (@MEAIndia) October 7, 2024

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Also, several Memorandum of Understandings (MoU) have been signed between India and Maldives including currency swap agreement, MoU between Rashtriya Raksha University of India and National College of Policing and Law Enforcement of the Maldives.

A MoU has been inked between Central Bureau of Investigation (CBI) and Anti-Corruption Commission of Maldives for bilateral cooperation on preventing and combating corruption.

Both the nations have also renewed two MoUs, including training and capacity building programs for Maldivian judicial officers, and in sports and Youth Affairs.

Take a look at the list of outcomes of the visit: pic.twitter.com/LACeI9xdlG

— Randhir Jaiswal (@MEAIndia) October 7, 2024

Ahead of his bilateral talks with PM Modi, Muizzu flagged the need for financial aid for the Maldives, saying India is “fully cognisant” of the fiscal situation of his country and will always be ready to “ease the burden” as one of the Male’s biggest development partners.

“India is fully cognisant 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,” Muizzu was quoted as saying in a BBC report.  

As Muizzu meets Modi, here’s a look at how concerning is the economy of the Maldives.  

1 - The Maldives is looking at a debt default as its foreign exchange reserves have dropped to $440 million, barely enough for one-and-a-half months of imports.

2 - As of March 2024, the total debt amounts to $8.3 billion, which is 110.1 per cent of the Maldives GDP. This debt includes $7.38 billion in budgetary debt and $921 million in guaranteed debt.  

3 - Maldives’ external debt stands at $3.4 billion, or 45 per cent of GDP.  

4 - In September this year, global credit rating agency Moody’s downgraded the Maldives’ credit rating, saying “default risks have risen materially”. It said, “(foreign) reserves remain significantly below the government’s external debt service of around $600 million in 2025 and over $1 billion in 2026."  

5 - In May, India extended vital budgetary support to the Maldives government with the rollover of a $50 million Treasury Bill for another year on the Maldivian government’s special request.  

6 - Last month (September), India extended emergency financial assistance to the Maldives by extending its subscription to the government treasury bill worth $50 million for a year. It was the second time this year, New Delhi offered such aid to the island nation in the Indian Ocean.

7 - The Maldives owes China USD 1.11 billion, which represents 14.77 per cent of its GDP and 32.8 per cent of its external debt.

8 - According to a report by Times of Oman, Maldives has made several requests for financial aid, including a $200 million grant and $350 million in soft loans from China, as well as a $500 million currency swap.  

9 - The report further mentioned that Muizzu has appealed to Abu Dhabi for $80 million for the Velana International Airport Development Project, and has also sought $50 million in cash grants from Saudi Arabia, UAE, Bahrain, Oman, Kuwait, and Qatar, along with a $200 million deposit with the Maldives Monetary Authority.

With inputs from agencies.