President Muizzu acknowledges India’s critical support through a ₹30 billion aid package and a bilateral currency swap agreement, strengthening economic ties between the two nations

Maldives President Mohamed Muizzu has lauded the Indian government for its crucial financial assistance, thanking Prime Minister Narendra Modi’s administration for delivering a ₹30 billion support package. Alongside this aid, a significant bilateral currency swap deal worth USD 400 million was secured, further solidifying economic relations between the two neighbours.

The currency swap agreement, aimed at stabilising the Maldivian economy, reflects the long-standing partnership between New Delhi and Malé. With the Maldives facing ongoing economic challenges, exacerbated by global financial instability and the impact of the COVID-19 pandemic, this gesture from India is timely. The currency swap arrangement will provide much-needed liquidity to the Maldivian government, allowing it to stabilise its reserves and address immediate financial obligations. This move is seen as a critical step toward ensuring macroeconomic stability.

During the announcement, President Muizzu expressed deep appreciation for India’s support, describing it as a “lifeline” at a time when the Maldives faces unprecedented economic difficulties. He noted that India’s commitment to the bilateral relationship has been evident through continued collaboration on various fronts, including infrastructure development, trade, and financial aid.

“India’s assistance is a reflection of the close bond we share and is proof of the trust and cooperation between our two countries,” said President Muizzu. He further added that the ₹30 billion package and the currency swap deal would help alleviate some of the financial pressures the Maldives is currently grappling with.

The announcement follows a series of high-level discussions between Indian and Maldivian officials aimed at strengthening bilateral cooperation. In recent years, India has become the Maldives’ most significant partner in various sectors, including health, education, and tourism. The economic relationship has deepened through initiatives like India’s “Neighbourhood First” policy, which places a premium on fostering strong regional partnerships.

India’s financial support package includes grants, concessional loans, and aid aimed at helping the Maldives recover from the economic downturn caused by external factors. A portion of the ₹30 billion assistance will be used to support ongoing infrastructure projects across the islands, including upgrades to airports, roads, and public facilities, which are critical to boosting tourism and trade. These projects are expected to provide jobs and revitalise the economy, which heavily relies on tourism.

The currency swap agreement, in particular, allows the Maldives to draw up to USD 400 million from India’s foreign exchange reserves, which can be exchanged for Maldivian Rufiyaa to help maintain liquidity. Currency swap deals like this one offer financial security, helping stabilise exchange rates and protect the Maldivian currency from external shocks. For the Maldives, this agreement is a safeguard that ensures the country can continue meeting its financial commitments while managing inflationary pressures.

For India, the strategic importance of the Maldives cannot be overstated. Located in the Indian Ocean, the Maldives plays a vital role in maintaining the security and trade routes in the region. The closer ties between the two nations ensure India maintains its influence in the region, countering other geopolitical actors’ growing presence. This support package, while economically beneficial to the Maldives, also underlines India’s strategic interests in fostering stability in its maritime neighbourhood.

President Muizzu’s remarks also come at a time of shifting dynamics in the Maldives’ foreign policy. The Maldivian leader has sought to balance relationships with both India and China, recognising the benefits of partnerships with both global powers. However, India’s consistent support, both financially and diplomatically, appears to have strengthened its position as the Maldives’ most reliable ally.

In his comments, President Muizzu stressed the importance of continued collaboration, not just in economic terms but also in areas like climate change, security, and disaster management. The Maldives, one of the most vulnerable nations to the effects of climate change, has long relied on India for assistance in managing environmental challenges. India has pledged its continued support in helping the island nation address these issues, ensuring the Maldives can protect its natural resources and coastal communities.

The news of the financial assistance package and currency swap deal has been met with widespread approval across the Maldives. Many view this partnership as a beacon of hope amid uncertain economic times. Financial analysts have pointed out that the liquidity boost provided by the currency swap will give the Maldivian government the breathing room it needs to focus on long-term recovery strategies rather than short-term fiscal crises.

In closing, the strengthening of ties between India and the Maldives comes at a pivotal moment for both nations. As they work together to overcome shared challenges, the future of this relationship looks promising. For the Maldives, this collaboration with India is not just about survival in tough times but about building a future of stability and mutual growth.