Maldivian President Mohamed Muizzu is expected to seek a bailout during his visit to India this week as the archipelago nation stares at an economic crisis with fears of debt default.
It’s Muizzu's first official bilateral visit after he was voted to power late last year following a campaign centred on an 'India out' policy, with a promise to reduce Delhi's influence.
Since then, ties have been strained between the countries but experts say the visit indicates that the Maldives can't afford to ignore its giant neighbour.
The foreign exchange reserves of the Maldives stood at about $440m (£334m) in September, just enough for one-and-a-half months of imports.
Last month, global agency Moody’s downgraded the Maldives' credit rating, saying that “default risks have risen materially”.
An Indian bailout will bolster the country’s foreign currency reserves.
Before visiting India, Muizzu chose to travel to Turkey and China - his visit to the latter in January was seen as a high-profile diplomatic snub to Delhi as previous Maldivian leaders first visited Delhi after being elected. Around the same time, a controversy erupted in India after three Maldivian officials made derogatory comments about Prime Minister Narendra Modi.
“President Muizzu’s visit is a turnaround in several ways,” says Azim Zahir, a Maldives analyst and lecturer at the University of Western Australia.
“Most notably, the visit is a realisation of how dependent the Maldives is on India, a dependency that no other country will find easy to fill,” he says.
Getty Images Maldives president Mohamed Muizzu (left) meets Indian Prime Minister Narendra Modi during the Getty Images
Muizzu visited India in June to attend Narendra Modi's swearing-in ceremony
The Maldives consists of about 1,200 coral islands and atolls located in the middle of the Indian Ocean. The archipelago has a population of about 520,000 compared to India’s 1.4 billion.
As a small island nation, the Maldives depends on its giant neighbour India for most of its food, infrastructure building and healthcare.
Delhi and Male have not officially confirmed that a financial package for the Maldives is on the agenda during the visit. But experts believe it will be part of the discussion.
“The key priority of Muizzu’s visit is to secure a financial helpline in the form of grant-in-aid and restructuring debt repayments,” a senior Maldivian editor, who did not want to be identified, told the BBC.
Muizzu also wants a “$400m currency swap deal sought by the Maldives central bank to shore up depleted foreign exchange reserves”, he added.
The ratings agency Moody’s further expressed serious concerns over Male’s financial situation, saying that "(foreign) reserves remain significantly below the government’s external debt service of around $600m in 2025 and over $1bn in 2026".
The public debt of the Maldives is about $8bn, including about $1.4bn it owes each to China and India.
“Despite Muizzu stating on several occasions that China has given a green signal for deferring debt payments for five years, financial assistance from Beijing has not been forthcoming,” the Maldivian editor said.
With no other country coming to the rescue, it appears that Muizzu is now reaching out to India to mend strained ties.
“It’s about resetting the tone and negative rhetoric from senior officials of Muizzu’s government that has considerably impacted Indian tourist arrivals,” says Zahir.
Reuters Chinese President Xi Jinping and Maldivian President Mohamed Muizzu attend a welcome ceremony at the Great Hall of the People in Beijing, China January 10, 2024Reuters
Muizzu's state visit to China in January was perceived as a snub to India
India has long wielded influence over the Maldives, whose strategic position in its backyard allowed it to monitor a crucial part of the Indian Ocean. But Muizzu wanted to change that by moving closer to China.
In January, Muizzu’s administration gave an ultimatum to India to withdraw about 80 troops based in the country. Delhi said they were stationed there to man and operate two rescue and reconnaissance helicopters and a Dornier aircraft it had donated years ago.
In the end, both countries agreed to replace troops with Indian civilian technical staff to operate the aircraft.
A month after assuming charge, Muizzu's administration also announced that it would not renew a hydrographic survey agreement with India that was signed by the previous government to map the seabed in the Maldivian territorial waters.
Then a row broke out after three of his deputy ministers made controversial comments about Modi, calling him a “clown”, “terrorist” and a "puppet of Israel".
The remarks set off an uproar and calls to boycott the Maldives on Indian social media. Male said the comments were personal and did not represent the views of the government. The three ministers were suspended from the cabinet.
In what was seen as a thinly-veiled criticism of the reaction on Indian social media, Muizzu said at the time: “We may be small, but that doesn’t give you the licence to bully us.”
Source: BBC
BDST: 1052 HRS, OCT 06, 2024
SMS
