Maldives: Pakistan has made many attempts in the past to create unrest in India and dominate India. Many attacks were carried out by encouraging terrorists. The Pathankot incident and several massive encounters saw India's army hurt. With this, Barat, whose patience was lost, severely damaged Pakistan. Along with the directive, Modi took the sensational decision of demonetisation to damage financial sources of terrorists. Initially, the people of the country were troubled by Modi's decision. Financial difficulties were encountered. The opposition has taken Modi's decision wrong. But its results have affected our cousin country Pakistan more than us. Pakistan is in deep economic crisis. It is a situation where a day does not pass even if you make debts. And in the order, the prices of essentials have increased hugely. People are suffering. Unemployment has increased significantly. China is dependent on World Bank loans. Now Maldives is also following the path of Pakistan. China looked after it and kept India away like a cupid. This is gradually moving towards a severe economic crisis.
Acting in favor of China..
It is known that a new government was formed in Maldives last year. But the current government is acting in favor of China. Prime Minister Modi's visit to Lakshadweep has led to a big controversy. Indian tourists stopped going to the country after the Ministers of Maldives put up posts criticizing the Prime Minister's visit. As a result, tourism is the main economic source of the Maldives, and the impact is now clearly visible. To overcome the financial problem, the sale of Islamic bonds of Maldives intensified. The 2026 dollar-denominated sukuk fell below a record low of 70 cents this week. This has increased the risk of default from Maldives. The second Fitch downgrade since June and recent moves by the Bank of Maldives to limit foreign currency spending have fueled offload holdings. All eyes are on the October 8 coupon payment as $500 million in sukuk debt matures in 2026.
Negotiations with India
Although the gross reserves were 395 million dollars in June, the usable reserves are only 45 million dollars. The Maldives Monetary Authority is in talks with India for a $400 million currency swap. But the Fitch rating downgrade underscores growing default concerns. Søren Morch, portfolio manager at Danske Bank, noted that the bank sold a lot of bonds in the early summer as reserves dwindled. He said that the situation is worse now. The key question, he said, is whether Muslim countries will allow the Maldives to default on the sukuk bond.
Tourism income is increasing.
Despite rising tourism revenues, the Maldives continues to build reserves dependent on imports and a peg to the dollar. The ruling People's National Congress, led by current Maldivian President Mohamed Muizju, who is pro-China, won a parliamentary majority earlier this year. After this, it seems that the geopolitical scenario there has become complicated. Also there are reports that some investors like Maciej Woznicka of Coily Frontier Markets are cautious.
