Maldives Seeks Relief As Debt Burden Looms, India Cautiously Engages

While Maldives is not facing bankruptcy as some media reports suggest, Male is grappling with substantial external debt nearing USD 4.038 billion and a comparable internal debt, setting the stage for a potential debt crisis in 2026. Under Mohammed Muizzu's leadership, the gross national income of Maldives stands at USD 5.6 billion.

Despite his vocal anti-India stance, Muizzu is seeking debt relief from close ally Xi Jinping and Islamic nations in the Middle East. However, with Chinese debt amounting to USD 1.3 billion, roughly 30% of the external debt, and sovereign bonds set to mature in 2026, financial support from Turkey and China seems unlikely, leaving the island nation in the throes of an economic downturn.

The Chinese surveillance ship Xiang Yang Hong 03, slated to dock at Male seaport for operational turnaround on February 8, is yet to arrive, currently positioned 20 hours from Male in the south Indian Ocean, well beyond the EEZ of Maldives, Sri Lanka, and India. While the ship was permitted to use the Male port solely for operational purposes and not for surveying or ocean bed mapping in Maldives' EEZ or beyond.

India is poised to replace the military crew of a Maldivian-flagged ALH helicopter by the end of this month or early March, with the Modi government closely monitoring the situation and ready to assist in the event of a humanitarian crisis in Maldives.

Despite Muizzu's anti-India stance, primarily driven by political motives ahead of the Majlis elections in April, the Modi government has approved the extension of the airstrip at Agatti islands in Lakshadweep and Minicoy Islands, along with the establishment of a new air base in Minicoy. Defence Minister Rajnath Singh is scheduled to commission the first squadron of MH-60 R Sikorsky helicopters in Kochi on March 4-5 before heading to Maldives aboard India's two aircraft carrier strike forces to commission the new base called INS Jatayu.

While Muizzu's political maneuvers may be aimed at the upcoming elections, public sentiment in Maldives towards China's Belt and Road Initiative (BRI) for infrastructure development remains lukewarm, especially in light of other countries like Pakistan, Kenya, and Tanzania facing challenges with BRI-related debt from Chinese EXIM banks.