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News India Live, Digital Desk: Maldives Economic Crisis: Maldives, the beautiful country of the Indian Ocean in the neighborhood of India, which was once known for its brilliant views and clean marine edges, is facing a serious economic crisis today. It seems that the habit of taking a huge loan from China is now overshadowing him and it has almost reached the verge of bankruptcy. In such a difficult time, India has once again come out as a support for it and is giving a lifeline.
Since the arrival of President Mohammad Mujju, the policies of Maldives looked more inclined towards China, but now the unique debt taken from China has become a big problem for him. According to the World Bank report, China is the largest lender of Maldives, and China has a debt of more than $ 1.3 billion. Overall, Maldives’ exterior debt has reached $ 3.4 billion, and its total public debt has been equal to 122.9% of GDP, about $ 8 billion. Alam is that Maldives has only $ 1.88 million left near Maldives. With this small amount, he will barely import a month. In the coming few years, Maldives have to repay the debt on a large scale; It has to pay around $ 600 million in 2025 and $ 1 billion in 2026.
The International Monetary Fund (IMF) has also warned Maldives about its rapidly growing debt and has put it in the category of ‘high risk’. Both IMF and World Bank have advised the Maldives to implement economic reforms as soon as possible to reduce their financial costs and better manage the risk of external debt.
India became ‘Sanjeevani’
In such serious circumstances, India has once again extended the hand of friendship. India has extended the deadline for the return deadline of the $ 5 million Treasury Bill for one year and the special thing is that there will be no interest on it. India has been continuously providing such interest-free financial assistance to Maldives since March 2019.
Recently, in a conversation between Indian Prime Minister Narendra Modi and Maldives President Moaz Mujju in October 2024, India has agreed to provide financial assistance of more than Rs 6,300 crore (about $ 750 million) to Maldives. It also includes a rollover of $ 400 million currency swap agreement and $ 100 million Treasury Bill. This assistance will be very helpful in dealing with the Forex crisis of Maldives. Mujju, who once supported the “India Out” campaign, is now talking about giving priority to relations with India.
Debt trap and impact on Maldives
Many experts believe that China’s “debt trap diplomacy” is a major reason for this crisis of Maldives. China gives huge loans to small countries for large infrastructure projects, which often know that they will not be able to repay it. When those countries are unable to repay the debt, China controls those strategic assets. Sri Lanka is a prominent example of this, which was implicated in a big economic crisis due to Chinese debt and had to give its Hambantota port on 99 years of lease. Maldives is also seen trapped in the trap of China, where China has invested money in large infrastructure projects like Maldives bridges, ports and airports, which are necessary for its own strategic interests.
The economy of Maldives depends largely on tourism. The decrease in the number of Kovid-19 epidemic and recently Indian tourists has also weakened its economy. Earlier, Maldives had to impose restrictions on foreign exchange transactions due to dollar deficiency.
This situation shows that even though political relations are up and down, as a neighbor, India has always stood with the Maldives and is ready to help him in economic stability.