Under huge Chinese debt, the Maldives to get $1.4 billion aid from India

India has come to the rescue of the debt-laden government of the Maldives, announcing a financial package of $1.4 billion during the maiden foreign visit of newly sworn-in leader President Ibrahim Mohamed Solih.

“The Prime Minister (Modi) announced the provision of financial assistance up to $1.4 billion in the form of budgetary support, currency swap and concessional lines of credit to fulfill the socio-economic development programmes of the Maldives,” the Ministry of External Affairs (MEA) said in a statement on Monday.

Indian financial assistance is seen as crucial for the strategically-located island nation, which, under the previous administration, had borrowed huge sums of money from China to fund infrastructure projects, in turn, part of Beijing’s One Belt One Road (OBOR) initiative.

According to a Reuters report, Male owes an approximate sum of $3.2 billion to Beijing, roughly translating into $8,000 for every citizen of the Maldives.

Sources close to the Maldivian government refused to say whether any share of India’s assistance would go towards servicing Chinese loans. A Forbes columnist had argued in November that India shouldn’t help Male to pay off Chinese loans.

Earlier in the day, Modi and Solih held discussions during the Maldivian’s leader three-day visit to India, his first foreign visit after being sworn-in as President of the island country in a keenly watched contest also featuring Mohamed Nasheed, the ex-President who was widely seen as pro-China.

The two leaders also signed four agreements on a slew of issues, the most sought-after among them being the “Agreement on the Facilitation of Visa Agreements.”

The other three agreements signed between the two SAARC nations were on Cultural Cooperation, establishing Mutual Cooperation to Improve the Ecosystem for Agribusiness and Cooperation in the field of Information & Communications Technology and Electronics.

Cooperation in maritime security formed another crucial part of bilateral discussions.

“The two leaders agreed to strengthen cooperation to enhance maritime security in the Indian Ocean Region through coordinated patrolling and aerial surveillance, exchange of information and capacity building,” said the joint statement.

The bilateral relations between the two countries have picked up since the election of Maldivian Democratic Party (MDP) candidate Solih as president. Prime Minister Modi was the only foreign leader to be present at his swearing-in ceremony in Male last month.