Maldives president Muizzu arrives today for state visit; eyes bailout package to salvage sinking nation

Nearly a year since he took over as the President of the Maldives, Mohamed Muizzu will arrive in India on Sunday for a five-day state visit. The premier's first official visit to India is expected to reset ties with Delhi which soured after Muizzu's stormed into power riding on 'India-out campaign.  

The President left for India at 12:06 pm local time on an Indian Defense Research and Development aircraft. The aircraft is operated by the Indian Air Force, reported Male-based Adhadhu.

"President His Excellency Dr @MMuizzu and First Lady Madam Sajidha Mohamed depart on a State Visit to the Republic of India," the President's office of Maldives said in a post on X.

Much has happened since Muizzu took over last year. India had to withdraw Indian military personnel from his country, replacing them with civilians. Muizzu, known for his pro-China, broke the long tradition of Maldivian presidents visiting New Delhi first to travel to Ankara, the capital of Turkey, for his first official visit. He later followed it up with his first bilateral visit to China, sending a message that the island nation was reorienting its foreign policy.   

Things hit rock bottom after Prime Minister Narendra Modi's visit to Lakshadweep. The derogatory remark made by three Maldivian officials about Narendra Modi triggered a backlash in the form of a ‘Boycott Maldives’ campaign. Indian tourists ditched the Maldives, hitting its tourism-driven economy badly. 

However, External Affairs Minister S Jaishankar's visit suggested relations were being mended. In Male, Jaishankar assured the country’s top leadership that the Maldives remains an important partner of India in maintaining peace, stability and prosperity in the Indian Ocean region.

Now, Muizzu's India visit is expected to reset ties in the wake of the financial crisis gripping the island nation. 

Already dependent on external loans, including from India, for much of its development projects, the economy of the Maldives began to deteriorate further under Muizzu. High inflation, increasing imports, and a reduction in fish exports and tourism revenues pushed the country to the edge of a sovereign default on a Sukuk.

At present, the foreign exchange reserves of the Maldives stand at  $470mn, just enough for two months of imports. Global agency Moody’s too downgraded the Maldives' credit rating, saying that “default risks have risen materially”. In this context, Maldives can't afford to overlook India.   

The Maldives owes the bulk of its $3.4 billion foreign debt to  hinese and Indian loans over the past decade. 

India has also expressed interest in helping the Maldives. Last month, it gave the country a bailout of $50 mn to avoid default.  Experts believe Muizzu's turnaround indicates that Maldives realise how dependent it is on India. 

Though there has been no official confirmation yet, both countries may discuss the aid package.  "The key priority of Muizzu’s visit is to secure a financial helpline in the form of grant-in-aid and restructuring debt repayments," a senior Maldivian editor told the BBC. "Muizzu also wants a $400m currency swap deal sought by the Maldives central bank to shore up depleted foreign exchange reserves," he added.

He added that despite Muizzu's overtures and statement that China has given a green signal for deferring debt payments for five years, financial assistance from Beijing has not been forthcoming.