Muizzu to meet Modi, request India’s support over looming economic crisis
(Source – The Hindu, International Edition – Page No. – 4)
| Topic: GS2 – International Relations – Bilateral Relations |
| Context |
| ● Maldives President Mohamed Muizzu’s state visit to India comes amid a looming economic crisis and significant debt repayments.
● During his talks with Prime Minister Narendra Modi, he seeks support for currency swaps and debt relief. ● This visit marks a pivotal moment in revitalising India-Maldives relations after recent tensions. |
Challenges Faced by Mauritius:
- Economic Crisis: The Maldives is grappling with a significant economic crisis, characterised by rising external debt and a debt-to-GDP ratio of approximately 110%.
- Imminent Debt Repayment: The country is approaching critical debt repayments, including a $25 million payment due for sukuk (Islamic bonds) and a total of $1.5 billion in repayments over the next two years.
- Declining Foreign Exchange Reserves: The Maldives’ foreign exchange reserves have dwindled to about $440 million, further straining the economy and raising concerns about potential default.
- Climate Change: Threats to coastal infrastructure and biodiversity, necessitating urgent adaptation and mitigation strategies.
- Food Security: Increasing reliance on imports for food, affecting self-sufficiency and resilience.
Ways India Can Help Mauritius:
- Currency Swap Arrangement: The Maldives is expected to request a currency swap to ease its financial burden.
- Debt Support: India can provide financial support to help manage imminent debt repayments and maintain economic stability.
- Development Partnerships: Continued collaboration on infrastructure projects and security cooperation can foster long-term economic growth.
- Capacity Building: Training programs for local officials in governance, administration, and disaster management.
- Bilateral Trade: Enhancing trade relations to diversify economic opportunities and reduce dependence on tourism.
| Key Insights from Recent Meeting: |
| ● Strengthening Ties: The meeting aims to reinforce India-Maldives relations following previous tensions and the Maldives’ “India Out” campaign.
● Development Initiatives: Discussions are expected to result in MoUs related to infrastructure and bilateral cooperation. ● Positive Outlook: Leaders expressed optimism that the visit would rejuvenate their nations’ friendship and collaboration. |
| Practice Question: Discuss the implications of Maldives’ economic challenges on its foreign relations, particularly with India. What role can India play in addressing these challenges, and how might this affect broader geopolitical dynamics in the Indian Ocean region? (250 Words /15 marks) |
