India, Maldives sign currency swap agreements; agree to discuss FTA

Confronted with the prospect of a debt crisis and repayment of past loans from China, visiting Maldivian President Mohamed Muizzu on Monday thanked India for its offer of financial assistance to the Indian Ocean archipelago. The two countries also agreed to discuss a bilateral free trade agreement (FTA).

India extended two currency swap agreements to the Maldives, including an agreement worth $400 million and another worth Rs 3,000 crore, to help the island nation’s access to foreign currency. The two countries also adopted a comprehensive economic and maritime security partnership, which has added a strategic dimension to the bilateral ties, Prime Minister Narendra Modi said after his talks with the visiting leader.
 

 

Modi and Muizzu launched the RuPay card in the Maldives, virtually inaugurated the new runway at the Hanimaadhoo International Airport, and agreed to further strengthen bilateral relations that had hit a rocky patch last year. “In the future, we will work to connect India and the Maldives through the Unified Payments Interface as well,” Modi said.
 

The island nation’s debt is estimated at 110 per cent of its gross domestic product. Earlier this year, India had come to the assistance of the Maldives by agreeing to roll over the treasury Bills subscribed by State Bank of India amounting to $100 million in May and September for a further period of one year.
 

“I am thankful to the Indian government for providing support in the form of Rs 3,000 crore, in addition to the $400 million bilateral currency swap agreement, which will be instrumental in addressing the foreign exchange (forex) issues we are facing right now,” Muizzu said after wide-ranging talks with Modi at Hyderabad House here.
 

“Yaarana jaari rahega (friendly ties will continue),” Foreign Secretary Vikram Misri said later at a briefing when asked how India managed to bridge the sharp divide in the bilateral ties that had emerged last year.
 

Muizzu, on a five-day visit to India, his first after winning the presidential election last year on the back of a campaign that sought to curb New Delhi’s influence in the island nation’s affairs, phrased ‘India Out’, and strived to draw closer to Beijing. He had also asked New Delhi to withdraw its military personnel posted in the archipelago nation by May this year.

The Indian foreign secretary said that the relationship between India and the Maldives was based on several substantive pillars. 
 

Asked about the currency swap agreement, the foreign secretary said, “The idea is to bolster the Maldives’ forex reserves, generate confidence in its existing forex position, and allow them to enter into deals or discussions where they require this enhanced forex that they can draw upon.”

The two sides also agreed to collaborate in the development of a commercial port at Thilafushi island with enhanced cargo handling capacity to decongest the Malé port.

India also agreed to repair and refit the Maldivian Coast Guard Ship Huravee on a gratis basis. The two leaders also agreed to explore collaboration for the development of transshipment facilities and bunkering services contributing to the Maldives Economic Gateway project at the Ihavandhippolhu and Gaadhoo islands.

They also agreed to jointly work to harness the full potential of Hanimaadhoo and Gan airports that are being developed with Indian assistance, as well as other airports in the Maldives, and in establishing an agriculture economic zone, tourism investments in Haa Dhaalu Atoll, and a fish processing and canning facility at Haa Alif Atoll with Indian assistance.

The two leaders also agreed to initiate discussions on an FTA and also discussed the opening of an Indian consulate in Addu and a Maldivian consulate in Bengaluru.