India has agreed to provide financial support worth hundreds of millions of dollars to the Maldives to help strengthen its ailing economy.
The deal was announced after Maldives President Mohammed Muizzu held talks with Prime Minister Narendra Modi during his five-day visit to India.
The support includes a $400 million currency swap deal and another 30 billion rupees ($357 million; £273 million) in another swap deal that will allow companies to do business in local currencies instead than in US dollars.
The Maldivian president was given a red carpet treatment after relations deteriorated in recent months. Modi called his visit a “new chapter” in relations.
“India will always be there for the progress and prosperity of the Maldivian people,” he said.
These statements – and the Indian financial package – signal a significant improvement in relations between Malé and Delhi, tense since Muizzu came to power in November 2023.
Shortly after taking office, he chose to visit Turkey and China – his visit to the latter in January notably seen as a high-profile snub to India, with previous Maldivian leaders traditionally visiting Delhi first after being elected.
Around the same time, India was angered by three Maldivian officials' disparaging comments about Modi.
But analysts say the country's struggling economy has pushed its leaders to strengthen ties with India.
The Maldives is facing a debt default as its foreign exchange reserves have fallen to $440m (£334m), just enough for a month and a half of imports.
On Monday, Muizzu said he had “in-depth discussions” with Modi to chart “the way forward for future collaboration between our two countries.”
He thanked India and said fiscal support would be “instrumental in resolving foreign exchange issues.”
The two countries also agreed to an agreement to begin negotiations on a free trade agreement.
Before his meeting with Modi, Muizzu told the BBC that he hoped India would help the country as it has done in the past.
“India is fully aware of our fiscal situation and, as one of our largest development partners, will always be ready to ease our burden, find better alternatives and solutions to the challenges we face” , he declared.
Without referring to his anti-India campaign, he said, “We are confident that all differences can be resolved through open dialogue and mutual understanding.” »
This contrasted with his previous decisions, some of which were seen as a way to reduce Delhi's influence and forge closer ties with India's rival China.
In February, his administration allowed a Chinese research vessel to dock in the Maldives, much to Delhi's dismay. Some saw it as a mission to collect data that could be used by the Chinese military for underwater operations.
Muizzu, however, rejected the pro-China label, calling his policy “Maldives first”.
But the country also continues to rely on China, which has so far provided $1.37 billion in loans.
Additional reporting by Anbarasan Ethirajan
