President Muizzu rules out IMF bailout program; confident that India will assist

President Dr. Mohamed Muizzu has ruled out the possibility that Maldives might have to opt for a bailout program from the International Monetary fund (IMF) amid an economic crisis while expressing confidence that neighboring India will provide assistance to the island nation.

The President, on Sunday, traveled to India for his first state visit to the nation since assuming office in November. The visit is being undertaken at the invitation of his Indian counterpart, Droupadi Murmu.

Ahead of his departure, President Muizzu gave an email interview to the media giant, BBC, in which he underscored that India was fully aware of Maldives’ fiscal situation and expressed confidence that India, as one of Maldives’ biggest development partners, will be ready to ease the island nation’s burden.

“India is fully cognizant of our fiscal situation, and as one of our biggest development partners, will always be ready to ease our burden, find better alternatives and solutions to the challenges we face,” he said.

The President emphasized that the Maldives was not facing sovereign debt default and in this trajectory, will not join an IMF bailout program to manage the crisis.

As President Muizzu commenced the five-day visit to India on Sunday, some Indian officials have expressed readiness to assist Maldives in overcoming its financial constraints.

He is scheduled to hold high-level meetings with President Murmu, Prime Minister Narendra Modi, and other senior officials of the Indian government during the visit.

Notably, the biggest global credit rating agencies Moody’s and Fitch have downgraded Maldives’ credit ranking citing the risk of sovereign default coupled with low foreign reserves.

However, central bank Maldives Monetary Authority (MMA) has assured Maldives will not sovereign default.

While the government is expected to seek fiscal assistance from India during President Muizzu’s trip, relations between Male’ and New Delhi had been strained in the early days of his presidency after he demanded that India withdraw its troops from Maldives – executing a pledge he made during his presidential campaign. Things escalated further after three Maldivian deputy ministers made disparaging remarks regarding India and Indian Prime Minister Modi on the social media platform X.

Maldives Foreign Ministry was quick to distance itself from the remarks, saying that they do not represent the views of the Male’ government. The three deputy ministers were suspended, and two of them – Mariyam Shiuna and Malsha Shareef who have since resigned from their posts.

There have also been official visits between the two countries by other top government officials, including Maldivian Foreign Minister Moosa Zameer and Indian External Affairs Minister Dr. S. Jaishankar.

With tensions gradually dissipating, India has recently postponed the repayment of two loans.