Understanding India-Maldives Ties: PM Modi's Role Amid Rising Debt
Maldives on the Brink: Financial Crisis Explained
As Maldives grapples with an impending debt crisis, India has stepped in to provide critical assistance. Prime Minister Modi announced a $100 million treasury roll over and a $400 million currency swap deal during a meeting with President Muizzu in New Delhi. The Maldives' debt now stands at an alarming 110% of GDP with growing fears regarding repayment of its Sukuk.
The Growing Debt Scenario
The financial pressure on Maldives is mounting, necessitating an urgent requirement of $114 million this year, with substantial payments due in the following years. Despite a peak GDP growth of 13.9% in 2022, the economy is now under strain, compounded by dwindling foreign reserves and a rising import bill due to global commodity prices.
Historical Context of India-Maldives Relations
- Long-standing partnership dating back to 1981 under a trade agreement.
- India's crucial role in Maldives' infrastructure development, providing over $1.4 billion in support.
- Recent diplomatic tensions following Muizzu's administration shift in foreign policy towards China.
Overall, the current financial dynamics reflect not just economic needs but also the strategic geopolitical interests of India and Maldives as they navigate a challenging landscape.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.