Maldives President to visit India amid tourism loss: Bailout package on card?

Maldives President Mohamed Muizzu is set to embark on his first bilateral to visit to India on Sunday, October 6. He will be on a state visit to Delhi from October 6 to 10. Muizzu had earlier visited India in June 2024 to attend the swearing-in ceremony of Prime Minister Narendra Modi and the Council of Ministers.
Muizzu’s visit to India comes when the Maldives have been witnessing a drop in the number of tourists from India. The island nation is a popular tourist destination.
Tourism from India to Maldives took a hit after a few Muizzu government officials slammed PM Modi over his visit to Lakshadweep in January this year. They criticized PM Modi for promoting Lakshadweep as the next tourist destination, suspecting that it was an attempt to project the Union Territory as an alternative tourist destination or a “competition” to the Maldives.
 
Since then, tourism from India to the Maldives has significantly dropped, pushing India from first to sixth position on the Maldives Tourism Markets chart.
According to the figures released by the Maldives’ Ministry of Tourism, the number of Indian tourists visiting the Maldives dropped by over 50,000 in the past year. This resulted in an estimated loss of about $150 million, BBC reported.
Between January 2024 and August 2024, the number of tourists from India dropped by around 40 percent (approximately 53,990 tourists) as compared to the tally during the same period last year, as per the data released the Maldives’ Ministry of Tourism.
According to the latest figures, the number of Indian tourists dropped by 23 percent in August alone.
 
Ahead of Muizzu’s visit to India, several reports claimed that the Maldivian President is eyeing a bailout package as it reels under debt and crisis. The public debt of the Maldives is about $8 billion, including about $1.4 billion it owes each to China and India, the BBC reported.
India and Maldives have not officially confirmed that a financial package for Male is on the agenda during the visit. However, a senior Maldivian editor told the BBC that the key priority of Muizzu’s visit is to secure a “financial helpline in the form of grant-in-aid and restructuring debt repayment”.
“Muizzu also wants a $400m currency swap deal sought by the Maldives central bank to shore up depleted foreign exchange reserves,” he was quoted as saying.
Maldives authorities were earlier quoted as saying last month that officials were working to arrange a $400 million foreign-currency swap with India’s central bank and a green bond sale.
According to Fitch Ratings, the Maldives’ gross foreign-exchange reserves plunged by roughly 20 percent to $395 million in July 2024 from $492 million in May 2024. This marked “the lowest level since December 2016”.
Besides, the Maldivian government has $50 million in sovereign external debt-servicing obligations falling due in 4Q24 and $64 million in publicly guaranteed external debt.
“The total external debt servicing will increase to USD557 million in 2025 and exceed $1 billion in 2026, including repayment of a $500 million sukuk,” as per Fitch Ratings in August 2024.
Experts also believe that the latest visit appears that Muizzu is now reaching out to India to mend strained diplomatic ties.
“President Dr Muizzu remains committed to enhancing bilateral ties with nations that play a crucial role in the development and growth of the Maldives, ensuring a dynamic and proactive foreign policy for the nation,” stated a press release by the President’s Office in Maldives.
After Maldives Vs Lakshadweep controversy, Muizzu was believed to pro-China leader, keeping in view his “India Out” election campaign last year. The Maldivian President had also triggered a controversy after she asked India to withdraw its troops based in the country.
“It’s about resetting the tone and negative rhetoric from senior officials of Muizzu’s government that has considerably impacted Indian tourist arrivals,” Azim Zahir, a Maldives analyst and lecturer at the University of Western Australia, was quoted by BBC as saying.
Since coming to power, Muizzu has toned down his anti-Indian rhetoric and has stated that he would not disrupt the regional balance by replacing Indian forces with Chinese troops.
The Maldives is one of India’s key maritime neighbours in the Indian Ocean Region and the overall bilateral ties including in areas of defence and security witnessed an upward trajectory under the previous government in Male.
The Ministry of External Affairs said that Maldives President Muizzu will meet President Droupadi Murmu and hold discussions with PM Modi on bilateral, regional, and international issues of mutual interest.
After attending key meets in Delhi, Muizzu will also visit Mumbai and Bengaluru where he would be attending business events.
Meanwhile, the Maldives President’s office said Muizzu will embark on a state visit to India following an official invitation extended by the President of India Droupadi Murmu.
“During his visit, President Dr Muizzu is scheduled to hold high-level meetings with President Murmu, Prime Minister His Excellency Narendra Modi, and other senior officials of the Indian government. Discussions will focus on strengthening bilateral cooperation and further enhancing the longstanding relationship between the two nations,” the release stated.
Earlier, President Muizzu had met PM Modi on the sidelines of the COP28 summit in Dubai on December 1, 2023. He also attended the swearing-in ceremony of PM Modi in New Delhi on June 9, 2024.