India has officially entered into a significant currency swap agreement with the Maldives, valued at $750 million, to assist the island nation in navigating its current foreign currency crisis. The announcement came after a productive meeting between Prime Minister Narendra Modi and Maldivian President Mohamed Muizzu in Delhi on October 7, 2024.
Under the terms of the agreement, the Maldives will receive $400 million and an additional ₹3,000 crore (approximately $357 million) as needed. This arrangement marks the largest financial support extended by India to a neighboring country since it provided assistance to Sri Lanka amid its economic turmoil in 2022.
During their discussions, PM Modi emphasized the importance of this financial support, stating that it would significantly bolster the Maldives’ ability to manage its foreign exchange reserves and promote economic stability. The move is seen as a testament to India’s commitment to its neighbors in the Indian Ocean region.
President Muizzu also addressed concerns surrounding the impact of recent social media campaigns in India that have led to a decline in tourist arrivals from the country. A “boycott Maldives” movement emerged in response to criticisms of PM Modi, resulting in a significant drop in Indian visitors, who are crucial to the Maldivian economy. “We hope to restore the strong ties that bind our peoples and welcome back Indian tourists to our beautiful islands,” Muizzu said.
The currency swap agreement not only aims to stabilize the Maldivian economy but also reinforces the strategic partnership between India and the Maldives. Both leaders acknowledged the need to strengthen collaboration in various sectors, including tourism, trade, and infrastructure development, to ensure mutual prosperity.
As the Maldives seeks to recover from its economic challenges, this agreement is expected to pave the way for renewed cooperation and growth between the two nations. The successful implementation of the currency swap will be a critical step in restoring confidence and fostering a stronger economic relationship in the region.
