The country's diplomatic relations will be guided to a large extent by its huge external financing requirements, resulting from its massive current-account shortfall. Furthermore, its strategic location in the Indian Ocean means that it will continue to garner a lot of interest from India and China, which are keen to expand their influence in the region.

Relations between China and the Maldives, which prospered under the administration of Mr Yameen, have soured under Mr Solih. We expect that the government will look to revise the terms of many of the deals agreed with Chinese companies. It will also refuse to pass the legislation needed to implement the free-trade agreement (FTA) between the Maldives and China that was signed in December 2017. The trade deal, which was signed during Mr Yameen's presidency, remains in limbo, as it is currently being reviewed by Mr Solih's administration.

By contrast, relations with India have strengthened under Mr Solih, and the two countries will continue to deepen bilateral ties during the forecast period. Our view is supported by a number of visits by high-level officials from both countries, including several meetings between Mr Solih and India's prime minister, Narendra Modi. These have been carried out in quick succession in the last year, since Mr Solih came to power. India has committed to provide additional financial support, partly offsetting the much-reduced role of China in financing construction in the Maldives. Nevertheless, the local government is likely to look to balance the influence of India against other regional powers, such as the US and Japan, in order to maximise its negotiating power.

The Maldives re-joined the Commonwealth in February 2020, following its departure from the association in October 2016. India was one of the strongest supporters of the country's bid for re-admission and had called for the expedition of the process on several occasions. Inclusion in the Commonwealth will boost the government's efforts to showcase the country as a progressive and stable democratic player on the international scene. It will also enable the country to forge deeper diplomatic ties with other major democracies, including Canada, Australia, New Zealand and the UK, and to engage more closely with the wider international community.