Update Country Report Maldives 24 Feb 2021

Event

On February 21st India's minister of external affairs, Subrahmanyam Jaishankar, concluded his two-day official visit to the Maldives.

Analysis

Mr Jaishankar, who was received by his Maldivian counterpart, Abdulla Shahid, held meetings with ministers and met the president, Ibrahim Mohamed Solih. He also held talks with leaders of opposition parties, who have traditionally been cautious of the Maldives' growing ties with India and were vocally critical of the trend in the past.

During his trip Mr Jaishankar oversaw the signing of several bilateral agreements, including one that solidifies India's assistance to the Maldives in its defence arrangements. Under a separate agreement, India committed to developing and maintaining a coast guard harbour in the Maldives for the Maldives National Defence Force. On behalf of the Indian government, the Export-Import (EXIM) Bank of India offered the Maldivian government a US$50m line of credit for the funding of defence projects. Another agreement was signed to redirect US$25.6m, an amount left untapped from a line of credit finalised in 2011, to road development projects. The EXIM Bank also signed a letter of intent with Fahi Dhiriulhun Corporation, a Maldivian state-owned enterprise, for providing a credit facility to fund the construction of 2,000 social housing units in Hulhumale, a reclaimed island.

Mr Jaishankar also presented a second consignment of 100,000 doses of the UK's Oxford University-AstraZeneca coronavirus (Covid-19) vaccine-branded as Covishield in India-as part of India's grant assistance. The vaccination programme in the Maldives, which kicked off on February 1st with 100,000 doses from India, has moved at an impressive pace. As at February 2021 more than 75,000 people had received their first of two shots. The government is expecting about 100,000 doses under the World Health Organisation's Covid-19 Vaccine Global Access (COVAX) Facility and has reportedly procured 700,000 doses from AstraZeneca (UK). Timely delivery of these doses will be critical to the Maldivian government's vaccination drive.

Impact on the forecast

The visit reinforces our view that India's strategic interests in the Maldives, and that country's large financing needs (much of which are on account of massive debt owed to China), will underpin strong bilateral ties in 2021-22. The two countries' relationship will also be strengthened by India's active assistance in vaccine supply. We expect 60% of the Maldives' population to be vaccinated by the first quarter of 2022. That said, early procurement of additional doses in larger than expected consignments presents a significant upside risk.