Maldives President reverses anti-India stance amid debt woes

Two nations chart fresh course on defence and economic cooperation during talks

- Nirmala Ganapathy India Bureau Chief

NEW DELHI - Maldives President Mohamed Muizzu is in India to mend ties in a surprising reversal of an earlier anti-India position that underscores the depth of a festering financial crisis in the archipelagic state.

During talks between Dr Muizzu and Indian Prime Minister Narendra Modi on Oct 7, the two South Asian neighbours charted a fresh course on defence and economic cooperation.

Mr Modi said both countries concluded talks on a currency swap agreement of US$400 million (S$521 million) and 30 billion rupees (S$466 million) in a move that will improve Maldivian access to foreign currency.

Said Dr Muizzu at a joint press conference with Mr Modi after the talks: "We are fully committed to strengthening our cooperation with India across a broad spectrum of areas." He added that the currency swap agreement would be "instrumental in addressing forex issues right now".

This development comes just weeks after ratings agencies Fitch and Moody's downgraded the Maldives' sovereign debt ratings.

Fitch estimated on Aug 29 that the Maldives' debt levels will further increase over the medium term from the estimated 109.4 per cent of its gross domestic product at the end of 2023.

Dr Muizzu's visit also represents a marked departure from a year go, when he swept to power at elections in 2023 on an anti-India platform that favoured closer ties with China, a move which contrasted with his predecessor Ibrahim Solih's pro-India policy.

The Maldives' pivot towards India amid economic woes echoes that of Sri Lanka in 2022, when New Delhi played the role of a lender of last resort to the island state at a time when it faced deep economic crisis.