Maldives president rules out IMF programme; seeks India’s fiscal aid

As the Maldives faces a looming economic crisis, President Mohamed Muizzu has ruled out seeking assistance from the International Monetary Fund (IMF), expressing confidence that India will provide the financial support the island nation urgently needs.

Speaking to the BBC ahead of his five-day visit to India, Muizzu made it clear that his administration intends to pursue a "home-grown agenda" to handle the crisis, and will not join an IMF programme.

“We are not facing a sovereign debt default,” Muizzu said in an interview, dismissing concerns about the Maldives’ financial stability. He added, “We have our own home-grown agenda,” indicating that his government is determined to chart its own course to overcome the fiscal challenges.

The Maldives' economic difficulties are escalating, with foreign exchange reserves dwindling to just $440 million – enough to cover only about one and a half months of imports.

Last month, global ratings agency Moody’s downgraded the country’s credit rating, warning that the risk of default had risen sharply. According to Moody's, the Maldives faces external debt service obligations of $600 million in 2025 and more than $1 billion in 2026, far exceeding its current reserves.

In response to this growing financial pressure, Muizzu is expected to seek a significant bailout from India, potentially worth hundreds of millions of dollars, during his Sunday's visit to Delhi.

“India is fully cognisant 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,” Muizzu told the BBC.

India has already extended $1.4 billion in financial support to the Maldives for infrastructure and development projects, but Muizzu’s visit is seen as crucial to securing additional aid to bolster the Maldives' foreign reserves. An Indian relief package would offer immediate economic reprieve and help stave off the threat of a debt default.

The decision to avoid an IMF program is significant, as many nations facing similar crises have turned to the IMF for structured financial assistance and debt restructuring. However, Muizzu is confident that India's aid, along with his government’s own economic measures, will be sufficient to address the crisis.

Muizzu’s stance marks a sharp turn in his approach towards India, particularly given his election campaign a year ago, which was based on an "India out" policy that called for the removal of Indian troops from the Maldives. In contrast, his current rhetoric emphasises reconciliation and cooperation with India.

“We are confident that any differences can be addressed through open dialogue and mutual understanding,” Muizzu said, signalling a willingness to strengthen ties with New Delhi.