Maldives President Muizzu's Visit to India

Maldivian President Mohamed Muizzu arrived in Delhi on October 6, 2024, for a four-day State Visit. He is scheduled to meet Prime Minister Narendra Modi on October 7, with discussions focusing on addressing the Maldives' economic crisis and urgent debt repayments.

Background:

President Muizzu, elected in November 2023, campaigned on an “India Out” movement, which emphasized concerns over India’s military presence in the Maldives, leading to increased tensions in bilateral relations.

Key Details of the Visit

Economic Crisis in the Maldives

1. Debt Issues: The Maldives faces significant economic challenges, with urgent debt repayments looming. President Muizzu is expected to request assistance from India to alleviate financial burdens.
2. Currency Swap and Debt Support: Talks at Hyderabad House may include requests for a currency swap arrangement and debt support from India.

Recent Developments in Financial Support

1. Indian Support: India announced in September 2024 that the State Bank of India would purchase Maldivian government bonds worth $50 million, providing crucial relief amid the financial crisis.
2. China’s Role: As a major creditor, China has agreed to postpone loan repayments for five years, offering additional relief to the Maldives.

Upcoming Payments

1. Sukuk Debt Repayment: On October 8, the Maldives must make a $25 million payment towards its $500 million Sukuk (Islamic bonds) debt. In total, the Maldives has $114 million due this year and approximately $1.5 billion over the next two years.
2. Rising Debt Issues: The Maldives has a debt-to-GDP ratio of about 110% and foreign exchange reserves of only $440 million, sufficient for just over a month of imports.

Credit Rating Downgrades

1. Concerns from Agencies: Credit rating agencies Moody’s and Fitch have downgraded the Maldives due to increased default risks. A potential default could mirror the crisis experienced by Sri Lanka in 2022.

Preparations for Talks

1. Initial Meetings: Prior to meeting PM Modi, External Affairs Minister S. Jaishankar and other officials held discussions with Muizzu to prepare for the upcoming talks.
2. Expected Agreements: Discussions may lead to agreements on Indian infrastructure projects, security cooperation, and other collaborative areas.

Improving Relations

1. Changing Dynamics: Muizzu's visit indicates a potential thaw in relations between India and the Maldives, moving away from tensions following his election.
2. Past Tensions: His previous criticism of PM Modi contributed to a “Boycott Maldives” campaign, significantly reducing Indian tourist visits to the Maldives.

Recent Developments

1. Cabinet Reshuffle: Following the resignation of the finance minister, former Foreign Minister Moosa Zameer has been appointed as the new Finance Minister.
2. Muizzu’s Itinerary: After Delhi, the President and his delegation plan to visit Agra, Mumbai, and then Bengaluru.

Optimistic Statements

1. Positive Outlook: External Affairs Minister Jaishankar expressed confidence that the talks would strengthen India-Maldives ties, with the new Maldivian Foreign Minister also emphasizing the visit's importance for enhancing cooperation.

Importance of Muizzu's Visit to India

Historical Context of India-Maldives Relations

1. Strong Ties: Historically, India and the Maldives have maintained good relations, with India providing substantial aid and military support.
2. Military Cooperation: Indian troops have trained Maldivian forces and participated in humanitarian missions.

Impact of the ‘India Out’ Campaign

1. Political Sentiment: The “India Out” campaign gained traction during Muizzu’s election, opposing Indian military presence.
2. Withdrawal Demands: After taking office, he insisted on the withdrawal of Indian troops, further straining relations.

Muizzu’s Diplomatic Visits

1. Visits to Turkey and China: His earlier visits were seen as a snub to India, traditionally the first destination for newly elected Maldivian leaders.

Shift in Muizzu’s Diplomatic Stance

1. Changing Tone: After the withdrawal of Indian troops, Muizzu has softened his stance, now acknowledging the importance of maintaining good relations with India.

Tourism and Economic Recovery

1. Decline in Indian Tourists: There has been a reduction of about 50,000 Indian tourists visiting the Maldives, resulting in an estimated loss of $150 million in tourism revenue.
2. Importance of Indian Tourists: Indian visitors are crucial to the Maldives’ tourism industry, and Muizzu aims to attract more Indian tourists to support economic recovery.

Strategic Importance of Relations

1. Geopolitical Concerns: Strong relations with the Maldives are vital for India, particularly in light of China’s increasing influence in the Indian Ocean region.
2. Potential for Future Cooperation: Strengthening ties with India could assist Muizzu in stabilizing the Maldives and addressing pressing economic challenges.

Conclusion

President Muizzu’s visit to India is critical for addressing the Maldives' urgent economic issues and repairing bilateral relations. With significant debt repayments looming, discussions with Indian leaders could provide essential financial support. This evolving relationship reflects a transition from past tensions to a more cooperative framework, underscoring the significance of strong ties between neighboring countries.

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