India signed a major currency swap agreement with the Maldives for $750 million to help the island nation tide over its current foreign currency crunch, after Prime Minister Narendra Modi met with Maldivian President Mohamed Muizzu in New Delhi on Monday.
The swap arrangement for $400 million and an additional ₹3,000 crore ($357 million), signed between the Reserve Bank of India and the Maldives Monetary Authority under the South Asian Association for Regional Cooperation (SAARC) Currency Swap Framework, will be available until 2027. It enables payments between the two countries to be made in different currencies.
Among the agreements signed are for the launch of the RuPay card in the Maldives and handover of 700 houses built with assistance by India. Memorandums of understanding were inked between the Central Bureau of Investigation and the Anti-Corruption Commission of the Maldives and between policing institutes and judicial training institutes; and also for cooperation in sports and youth affairs.
Speaking of people-to-people ties, which were hit by a “boycott Maldives” social media campaign in India in response to criticism of Mr. Modi in the islands, Mr. Muizzu said he hoped Indian tourists, whose numbers have halved this year, would return. “India is one of our largest tourism source markets and we hope to welcome more Indian tourists to the Maldives, allowing for shared growth and understanding between our peoples,” Mr. Muizzu said in a joint press event after the talks.
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India also agreed to step up cooperation on trade in national currencies, and to work on a Free Trade Agreement, as Foreign Secretary Vikram Misri said that other requests made by the Maldives, understood to include debt repayment waivers, further credit lines, and economic assistance, would be “studied” and decided on in the “coming weeks and months”. The two countries released a “vision statement” for a “comprehensive economic and maritime security partnership” to be negotiated in the future; inaugurated a jointly constructed runway for an international airport at Hanimadhoo island; and signed an agreement for India to support the Maldives on the refit of a Coast Guard ship.
There was no mention of the return of Indian military personnel to the archipelago, however, a subject that had led to tension between New Delhi and Male, until India agreed to withdraw them and replace them with technical personnel in May 2023. When asked, Mr. Misri said the issue had been “resolved satisfactorily” and did not require revisiting as technical staff were now completing the work of aircraft maintenance.
He clarified that the refit of the Maldivian Coast Guard ship Huravee would be carried out at an Indian facility. This will not require Indian personnel to travel to the Maldives.
“India has always been a First Responder for the Maldives,” Mr. Modi said in a press statement after the talks. “India has always fulfilled its duties as a neighbour,” he added, referring to the supply of essential commodities during a crisis, and vaccines during the COVID-19 pandemic.
Addressing the media later, Mr. Misri said that India had played a “historic” role in the Maldives, including thwarting a coup there in 1988, and sending emergency assistance after the tsunami in 2004. He referred to India’s latest currency swap arrangement as a way of sending out a “signal of comfort and confidence in the existing foreign exchange position” for the Maldives, which had reached record lows of $440 million, far below its pending outflows.
Mr. Muizzu’s visit, his first bilateral trip to India, comes eight months after a visit to Beijing, which resulted in a number of other agreements; an economic pact to boost Chinese investments and provide currency swap arrangements; a defence pact; and debt repayment waiver for five years. Sidestepping questions about the Maldives-China relationship, particularly the defence agreement signed in March this year, Mr. Misri said while they had discussed some “regional” issues, the “focus was on discussing bilateral relations today”.
(With inputs from Meera Srinivasan in Colombo)
Published – October 07, 2024 12:29 pm IST