Prime Minister Narendra Modi said India will offer financial support to the cash-strapped Maldives in form of a $100-million treasury bills rollover. The countries also signed a $400-million currency swap agreement.
India stepped up its development assistance to the Maldives after Modi and Maldive’s President Mohamed Muizzu held talks in New Delhi Monday in a bid to repair strained ties that saw the president of the Indian Ocean archipelago forging closer relations with China.
The two leaders virtually inaugurated a new runway at the Hanimaadhoo international airport in the Maldives. Modi also announced work will be accelerated on the India-assisted Greater Male Connectivity Project, which aims to link key islands of the Maldives through modern transport networks.
“India is Maldives’ nearest neighbor and a close friend,” Modi said during a joint news conference. He said the Maldives held an important position in India’s “neighborhood first policy.”
Tensions between India and the Maldives have grown since Muizzu, who favors closer ties with China, was elected last year after defeating India-friendly incumbent Ibrahim Mohamed Solih. Leading up to the election, Muizzu had promised to expel Indian soldiers deployed in the Maldives to help with humanitarian assistance.
In May, New Delhi replaced dozens of its soldiers with civilian experts.
In January, Maldivian leaders lashed out at Modi for promoting India’s Lakshadweep archipelago for Indian travelers. Lakshadweep is off the southwestern coast of the Indian mainland.
Maldivians saw the move as a way to lure Indian tourists away from their country. It sparked angry protests from Indian celebrities who called for a tourism boycott to the Maldives. Tourism is the mainstay of the Maldives’ economy.
A thaw ensued after Muizzu attended Modi’s June swearing-in ceremony in New Delhi for a third five-year term.
“India is a key partner in the socio-economic and infrastructure development of the Maldives and has stood by the Maldives during our times of need,” Muizzu said after the meeting. He said the currency swap agreement “will be instrumental in addressing the foreign exchange issues we are facing right now.”
Muizzu will also hold meetings with senior Indian officials during his five-day visit.
Regional powers India and China compete for influence in the archipelago nation, which is strategically located in the Indian Ocean.