19/02/2024
The Maldives is facing significant economic challenges due to its substantial loans from China, with the island nation owing more than $3 billion to Beijing. The International Monetary Fund (IMF) recently cautioned the Maldives about the high risk of 'debt distress' as it increasingly leans towards China.
Since Mohamed Muizzu assumed the presidency in November 2023, the Maldives has displayed a strong affinity towards China. Beijing has pledged additional funds to the Maldives, and Muizzu expressed gratitude to China during his visit in January 2023, praising their "selfless assistance" in providing development funds. However, the IMF has called for urgent policy adjustments, stating that without significant changes, fiscal deficits and public debt are expected to remain high, keeping the Maldives at risk of debt distress.
The Maldives has also faced a financial crisis following deteriorating relations with India. The Maldives President recently stated that the government is unable to launch new development projects due to the country's poor financial situation.
Relations between Maldives and India soured after Muizzu assumed power, with the incumbent president reportedly leaning towards China, a major lender to Male.
The Maldives, heavily reliant on its tourism industry, suffered a severe setback after a minister (now suspended) and other leaders made derogatory remarks against Indian PM Narendra Modi. This led to calls for a boycott of the Maldives by Indians, prompting travel agencies like EaseMyTrip to suspend all flight bookings to the Maldives.
The controversy escalated after former Maldives minister and two other leaders made disparaging comments against India and PM Modi following his visit to Lakshadweep, where he promoted tourism by posting captivating pictures of the landscape.
Meanwhile, Maldives President Dr. Mohamed Muizzu has demanded the withdrawal of Indian troops from the Maldives. Currently, around 70 Indian troops, a Dornier 228 maritime patrol aircraft, and two HAL Dhruv helicopters are stationed in the Maldives.
