Maldives President Mohamed Muizzu thanked China and India for their assistance in strengthening the country’s economy, citing their help in addressing the nation’s debt crisis and future development. Muizzu specifically praised the two countries for their cooperation in repaying the country’s debt, highlighting their importance in ensuring economic sovereignty for the Maldivian people.
India- Maldives ties
Muizzu initially gained power by running on an anti-India platform, demanding the removal of Indian military personnel operating helicopters and Dornier aircraft gifted by India. However, after negotiating an agreement to replace these personnel with local pilots, Muizzu’s stance towards India shifted, and he began to take a more conciliatory approach. Later, Muizzu attended Indian Prime Minister Narendra Modi’s swearing-in ceremony, signaling a marked change in his policy towards India.
India’s Financial assistance and debt restructuring: Muizzu praised the Rs 400 crore assistance provided by India and sought to restructure the debt owed to India by the Maldives. This shift in policy came after the International Monetary Fund (IMF) warned the Maldives of a high risk of debt distress without significant policy changes.
Currency swap agreements: The Maldivian government is also working on currency swap agreements with India to help local businesses. This would alleviate the dollar shortage and ensure economic sovereignty.
Humanitarian and development assistance: India has historically provided substantial humanitarian and development assistance to the Maldives. During the Sri Lankan crisis, India stepped in with about USD four billion in aid when China declined to restructure Colombo’s loans.
Free trade agreement with India: The Maldivian government has expressed its intention to establish a free trade agreement with India, similar to the one it has with China, in order to boost its economic prospects. Additionally, the country is working towards negotiating free trade agreements with Turkey and Britain, with the ultimate goal of strengthening its global economic position and increasing its trading opportunities.
How’s how China’s assistance helped Maldives –
Permitting Chinese research vessels: Muizzu allowed Chinese research vessels, often regarded as “spy ships,” to berth in Maldivian waters after Sri Lanka banned them for a year, further indicating the strengthening ties between Maldives and China.
Debt restructuring and loan deferral: The Maldives sought the restructuring of its substantial debt to China, which reportedly amounted to over USD 1.3 billion. Initially, Beijing expressed reservations, but Muizzu announced that China agreed to defer loan repayments for five years, providing significant relief to avoid a fiscal crisis.
Infrastructure and renewable energy projects: China has strengthened its assistance to the Maldives by committing to key infrastructure and renewable energy projects. Following talks between Maldives Foreign Minister Moosa Zameer and Chinese officials in Beijing, a Letter of Exchange was signed for the feasibility study on the redevelopment of Male and Villimal Roads Project, further solidifying China’s support for the island nation’s development efforts.
Free trade agreement Implementation: The Maldives has announced that the implementation of a free trade agreement (FTA) with China, signed during the previous administration, is set to commence in September. Under this agreement, tariffs will be eliminated for 7,897 goods across nine sectors, including 298 fisheries products, allowing for increased trade and economic cooperation between the two nations.