In a significant diplomatic shift, President Mohammed Muizzu of the Maldives is making a historic visit to India to attend Prime Minister Narendra Modi’s swearing-in ceremony.
This visit marks a remarkable turn in relations between the two nations, as Muizzu had previously been associated with the “India Out” campaign, a movement critical of India’s influence in Maldivian affairs. His presence at this event signifies not only a change in diplomatic stance but also a potential renewal of the long-standing friendship between India and the Maldives.
The India Out campaign was a politically charged movement in the Maldives, advocating for the removal of Indian military presence and influence in the country. This campaign gained traction under the leadership of former President Abdulla Yameen and found support among Muizzu and his Progressive Party of Maldives (PPM). The movement criticized the government’s perceived over-reliance on India and called for greater national sovereignty.
During his tenure as mayor of Malé and later as a presidential candidate, Muizzu echoed these sentiments, raising concerns about the Maldives’ relationship with India. His alignment with the ‘India Out’ campaign was a significant aspect of his political identity, appealing to voters who were wary of foreign influence in domestic affairs.
Muizzu’s decision to attend PM Modi’s swearing-in ceremony is laden with symbolic and practical implications. It represents an olive branch extended to India, signaling a willingness to engage in constructive dialogue and cooperation. This move is a clear indication that Muizzu is prioritizing national interests over partisan politics.
in his first interview with the local media since assuming office, Muizzu said India was instrumental in providing aid to the Maldives and has implemented the ‘greatest number’ of projects. During the interview, Muizzu urged India to accommodate debt relief measures for the Maldives in the repayment of ‘the hefty loans taken over consecutive governments
Over the past five years, the Maldives has seen a significant increase in its borrowing from India’s Export-Import Bank (Exim Bank), with the total amount swelling to $1.4 billion (MVR 22 billion). This surge in debt highlights the evolving financial dynamics between the two nations, emphasizing India’s role in financing major infrastructure and development projects in the Maldives.
According to the debt data released by the Maldivian Finance Ministry, the Maldives has procured six substantial loans from Exim Bank within these five years. The largest portion of this borrowing was directed towards the Villimalé-Gulhifalhu link construction project, which alone accounted for USD 400 million (MVR 6.1 billion). This project is a critical infrastructure endeavor aimed at enhancing connectivity and supporting economic growth in the Maldives.
In addition to this, Exim Bank sanctioned a loan of USD 41 million (MVR 632 million) for the construction of a new police station, and another USD 40 million (MVR 616 million) for a sports project. The remaining funds are allocated for various projects required by the central government under India’s Line of Credit. These loans are disbursed incrementally as each project progresses, ensuring that funds are available when needed to keep projects on track.
As of the end of the previous year, the Maldivian government’s outstanding debt to the Export-Import Bank of India amounted to MVR 6.2 billion. With numerous projects still underway, the future repayments to Exim Bank are expected to rise, reflecting the ongoing financial commitments tied to these development efforts.
In 2023, Exim Bank of India held the largest share of the Maldivian government’s loans. The total amount of loans taken by the government stands at around MVR 50 billion. This includes a substantial USD 500 million (MVR 7.7 billion) sold in September 2021. Combined with sukuk bonds, the state is obligated to settle approximately MVR 15 billion in debt by 2026. This situation marks the first instance in a year where the Maldivian state faces such a substantial debt repayment challenge.
The visit underscores the importance of India-Maldives relations. India has historically been a critical ally for the Maldives, providing economic aid, military assistance, and disaster relief. In recent years, India has invested heavily in the Maldives’ infrastructure, tourism, and healthcare sectors, contributing significantly to the nation’s development.
President Mohammed Muizzu’s attendance at Prime Minister Narendra Modi’s swearing-in ceremony is more than just a diplomatic gesture; it is a powerful symbol of reconciliation and forward-looking diplomacy. From advocating the “India Out” campaign to making a significant visit to India, Muizzu’s actions reflect a pragmatic approach to international relations, recognizing the importance of collaboration over confrontation.
Muizzu’s visit to India is a promising beginning for a renewed chapter in India-Maldives relations. It highlights the importance of diplomacy and the ability to adapt to changing geopolitical landscapes. By fostering a spirit of cooperation and mutual respect, both nations can work together to address shared challenges and build a prosperous future. The visit also sets the stage for future engagements and collaborations. Regular high-level interactions, joint initiatives, and people-to-people exchanges can further solidify the bond between the two countries.
But more importantly, the Maldives’ borrowing from India’s Exim Bank has surged to significant levels over the past five years, reflecting both the opportunities and challenges associated with such financial commitments. The loans have enabled crucial infrastructure and development projects that are expected to drive economic growth. However, the increasing debt burden underscores the need for prudent financial management to ensure sustainability.
As the Maldives navigates this complex financial landscape, the government must strike a balance between leveraging foreign loans for development and maintaining fiscal health. The evolving relationship with India, marked by substantial financial support, will play a pivotal role in shaping the future economic trajectory of the Maldives.
Muizzu needs to now wear an ‘India In’ T-shirt with a Lotus in Saffron color instead of a China-sponsored ‘India Out’ T-shirt in red color.
