India provides INR 8.32bn in aid to Maldives

The government of India provided a substancial aid package of INR 8.23 billion which is approximately MVR 1,487,971,865.36 billion to the government of Maldives for the year 2023-2024.

This is the largest aid given to any foreign country during this period. This is a measure taken to support the Maldives in overcoming the financial difficulties faced due to the Covid-19 pandemic.

As the Maldives faced financial difficulties, the neighboring country has provided generous assistance to rescue the island nation. India provided the largest aid to President Dr. Mohamed Muizzu's government last year.

According to the statistics submitted by the government to the People's Majlis, India has provided an aid of INR 8.32 billion to the Maldives during the year 2023-2024.

Due to the lack of economic growth in the Maldives in connection with Covid-19, debt difficulties have arisen. While GDP growth reached 13.9 percent in 2022, that figure has dropped to four percent in 2023, and the World Bank says tourists have spent at lower rates than before the pandemic.

Since the current administration came to power, financial assistance from India includes a USD 100 million treasury bill, USD 400 million, and a INR 30 billion currency swap agreement.

This time when Indian newspapers have reported that India has provided aid to the Maldives coincides with a time the current administration is making deals with China again. In this regard, India has raised questions about maritime security taken by China with the agreement of the Maldives' hydrography agreement with China.

In addition to this, media outlets have reported that the Muizzu administration has been forced to take on more debt again as foreign financial aid has not been received. Although the Maldives sought financial assistance from various financial institutions, the Economic Times has also stated that this effort has not been successful so far. This includes the government's request for USD 300 million from each Gulf Cooperation Council (GCC) country, but the GCC countries have not given an optimistic response to this request from the government.

Further, the president requested USD 200 million in budget support from China and refinancing for debt repayment and currency exchange, but China has not given an optimistic response so far. However, with India's USD 750 million currency swap, it has been reported that the Maldives has received some temporary relief and opportunity to maintain import expenses and government expenditures for the time being.

Before his trip to India in October 2024, Muizzu said that he had never opposed India. He also said that India knows about the financial difficulties facing his country and is ready to help.

Muizzu's current policy towards India is different from the policy he pushed for when he took office about a year ago, urging the withdrawal of Indian troops from the country. He has also promised to run new major projects with Chinese assistance. His campaign has plunged the Maldives into the center of rivalry between the two powers seeking to influence the strategic location of the Indian Ocean nation.