President Mohamed Muizzu expressed gratitude to India for its support in strengthening the Maldives’ fragile economy, emphasizing the collaboration between the two countries in addressing the Island nation’s looming debt crisis and future development. Speaking at the 59th anniversary of the country’s independence, Muizzu also acknowledged China’s significant role in providing assistance.
“On behalf of the Maldivian people, I thank the Chinese government and the Indian government for their cooperation in strengthening the economy and assuring our economic sovereignty,” Muizzu stated, as reported by Maldivian news portal adhadhu.com.
Shift in Foreign Policy
Muizzu, who rose to power last year with an anti-India campaign, initially sought the removal of around 80 Indian military personnel operating helicopters and Dornier aircraft donated by India. However, his stance has softened, evidenced by his attendance at Prime Minister Narendra Modi’s swearing-in ceremony and his praise for India’s Rs 400 crore assistance. This shift comes as the International Monetary Fund (IMF) warned of a high risk of debt distress in the Maldives without significant policy changes.
China, perceived as a strategic ally under Muizzu’s leadership, scaled up its relations with the Maldives. Early this year, Muizzu visited China, where the two countries elevated their ties to a comprehensive strategic cooperative partnership and signed 20 agreements, including a military assistance pact, causing unease in India.
Loan Restructuring and Economic Relief
In response to the IMF’s warnings, the Muizzu government sought the restructuring of loans from China. Maldives’ debt to China reportedly amounts to over USD 1.3 billion. While Beijing initially expressed reservations about restructuring the debt, Muizzu announced that China has agreed to defer loan repayments for five years, providing significant relief and helping the Maldives avoid a debt default similar to Sri Lanka’s crisis.
A large portion of the loans taken from China’s Exim Bank for development projects during former President Yameen’s government must be repaid in 2026. Technical work on restructuring these loans is ongoing. Muizzu emphasized that foreign policy should protect the country’s independence.
Future Trade Agreements and Economic Initiatives
Muizzu announced the implementation of a free trade agreement (FTA) with China starting in September, which will eliminate tariffs on 7,897 items, including 298 fisheries products. He expressed hope to sign a similar agreement with India and mentioned ongoing efforts to enter FTAs with Turkey and Britain.
To alleviate the dollar shortage and ensure economic sovereignty, the government is also working on currency swap agreements with China and India to support local businesses.
China continues to ramp up its aid to the Maldives, focusing on key infrastructure and renewable energy projects. Maldivian Foreign Minister Moosa Zameer, during his visit to Beijing, signed a Letter of Exchange on the feasibility study for the redevelopment of Male and Villimal Roads Project, aligning with Muizzu’s government pledges.
