Reflections and Roadmap: Maldives’ Journey Through 2024 and Prospects for 2025

At the outset of 2025, the archipelago nation of Maldives reflects on the previous year, which was defined by remarkable achievements, significant challenges, and pivotal transitions. Spread across 26 atolls, the country is home to a vibrant culture shaped by centuries of maritime trade and its strategic position in the Indian Ocean Region (IOR). Catering to a population of around half a million, Maldives relies heavily on tourism as the backbone of its economy, complemented by fish exports.

During 2024, Maldives witnessed consequential developments in its domestic political landscape, economic outlook, foreign policy, and environmental stressors. This review highlights the milestones that shaped the Maldives in 2024, offering a comprehensive look at the progress made and the road ahead for India towards this dynamic island nation.

Domestic Political Landscape

President Muizzu embarked 2024 on the back of a favourable result in the Maldives 2023 Parliamentary elections. Since becoming president, Muizzu has been under intense opposition scrutiny. In January 2024, clashes broke out inside parliament between PNC and opposition parliamentarians over the latter’s refusal to approve President Muizzu’s appointments to cabinet posts. The Maldivian Democratic Party (MDP), along with the Democrats, even considered impeaching President Muizzu.

Despite the backlash, President Muizzu consolidated his control after securing a landslide victory in the archipelago’s fourth multiparty parliamentary elections, which concluded in April 2024. By winning the 2024 parliamentary elections, Muizzu was able to end the tussle between the legislative and executive arms of the island nation. President Muizzu extended his control over the nation’s mechanisms by ratifying the Sixth Amendment to the constitution of Maldives.^[1] Key political debates also revolved around governance transparency and corruption allegations, particularly in health and social programmes.

With President Muizzu gaining control, the Maldives experienced political stability, which is essential for the nation's growth. However, the political stability was not reflected well in the nation's economic stability.

Economic Outlook

During 2024, Maldives faced heightened fiscal vulnerabilities, as stated by the World Bank. ^[2] Financial constraints, including a rising total debt to GDP ratio and inflationary pressures, adjoined with public dissatisfaction over government spending, dilated Maldivian economic concerns. The real GDP growth is expected to plummet from 8.7 percent in 2023 to 5.5 percent in 2024, ^[3] whereas the debt-to-GDP ratio rose to 114.6 percent in 2024 ^[4] from 97.7 percent in 2023. ^[5] The Maldivian government’s economic strategies have been criticised, citing inefficiencies and falling official reserve assets. As of September 2024, the Maldives official reserve assets stood at around USD 371 million, plummeting 19 percent from August 2024, reaching a record low in the past eight years. ^[6]

The nation's debt situation worsened and was reflected by the declining Fitch and Moody’s credit rating. With external debt servicing obligations due in 2025 at USD 557 million and USD 1 billion in 2026, the situation is bound to get more adverse. ^[7] Under this context, 2024 has become the most indebted year in the island nation's history. ^[8]

While government expenses have soared and debt has increased, development projects have reached a standstill. Maldives former Minister of Finance Ibrahim Ameer stated that the small and medium enterprises are not functioning to the fullest, fishing activities have slowed down, and Aasandha and National Social Protection Agency (NSPA) benefits are not being received.^[9]

Economically, Maldives is majorly dependent on tourism and the export of tuna fish. These two sectors comprise nearly half of the nation’s GDP and employment. Yet both these fronts also remained under stress during 2024. Maldives Customs Services states that the front of Maldivian exports of tuna fish is in decline. For instance, exports of tuna fishes fell by 47 percent during November 2024 compared to the exports during November 2023.^[10] On the front of tourism, the Maldivian tourism industry witnessed a steep surge in tourist arrivals in 2024, surpassing 2 million for the first time in history. ^[11] However, due to a continued decrease in spending per tourist, these higher arrivals are not likely to increase economic growth significantly.

So, Maldives was marred by financial constraints as it continued leveraging its strategic geographical position.

Foreign Policy

Under the leadership of former Maldivian President Mohammed Solih, the country's diplomatic orientation was notably aligned with India. However, this approach shifted following the election of President Muizzu in 2023, who secured victory on a platform emphasizing an 'India-Out' or 'Maldives First' agenda.

With this backdrop, President Muizzu ensured that there would be no foreign military presence on Maldivian soil, which referred to the contingent of Indian military stationed in Maldives for people's welfare, humanitarian assistance, disaster relief, and combating illegal maritime activities.^[12] At the same time, the government announced its decision not to review the hydrographic survey agreement with India. ^[13] Relations experienced another hiccup when President Muizzu made his first official state visit to Turkey. These delimitations impacted the bilateral engagements between India and the Maldives.

Moreover, in January 2024, the India-Maldives relations were further dented when three Deputy Ministers in the Ministry of Youth Empowerment, Information and Art of Maldives made derogatory remarks about Indian PM Modi. These remarks had an impulsive reaction from the Indian tourists.

Moreover, President Muizzu conducted an official state visit to China and asked China to become the Maldives’ most significant source of tourism.^[14] During the visit, China and the Maldives signed 20 agreements covering several areas, including strengthening tourism between the two countries, disaster risk reduction, blue economy, and investment in the digital economy.^[15] Further, Chinese President Xi Jinping and President Muizzu agreed to upgrade bilateral ties to a comprehensive strategic cooperative partnership and jointly commit to building a China-Maldives community with a shared future, laying out broad prospects for bilateral relations. ^[16]

Adjoined by strengthening Maldives-China relations, several factors contributed to uncertainties in India-Maldives cooperation.

During the initial months of his presidency, President Muizzu sought to move closer to China but gradually recast his government policy, balancing relations with India. Despite withdrawing the Indian military personnel from Maldives, both nations agreed to keep the aviation platforms operational. Similarly, the unfortunate incident of remarks made by the three deputy ministers was not blown out of proportion and was settled diplomatically.

Moreover, President Muizzu conducted a state visit to India in October 2024. In the lead-up to the official visit to India, President Muizzu regarded India as their key development partner and expected India to ease the burden of the ongoing fiscal situation in Maldives. ^[17] India duly lived up to its role of first responder in crises in the neighbourhood and was provided with a currency swap agreement of nearly USD 756.8 million. ^[18] Various and a wide array of arrangements, MoUs, and developmental cooperations were agreed upon by India and Maldives, primarily among these being the ‘Vision for a Comprehensive Economic and Maritime Security Partnership.’

Beyond striving to maintain a balanced and neutral position in the broader geopolitical dynamics between India and China in the Indian Ocean region, the Maldives has actively worked to deepen its diplomatic and strategic engagements with West Asian nations and Türkiye. In 2024, the defence ties between Maldives and Türkiye further depend on Maldives' purchase of the Bayraktar TB2 drones from Türkiye for patrolling purposes.

In 2024, Maldives navigated complex internal and external pressures, balancing economic, environmental, and political objectives. These developments highlighted the dynamic interplay of domestic politics and foreign policy in shaping the trajectory of the archipelago nation.

Environmental Stressors

Being on the frontlines of climate change, Maldives continued its proactive environmental initiatives in 2024, reaffirming its commitment to sustainable development and ecological preservation. With rising sea levels posing an existential threat, the government has prioritized innovative policies and international collaboration to safeguard its ecosystem.

Consisting of low-lying small atolls, where around 80 percent of the land area is merely around the one-meter mark of sea level, Maldives is highly vulnerable to the negative impacts of climate change, particularly coastal erosion. ^[19] In order to counter this threat, the Government of Maldives partnered with the UN Environment Programme (UNEP) and implemented a National Adaptation Plan (NAP). NAP was implemented to increase the island nation's climate resilience. The Green Climate Fund funded USD 2.8 million to support Maldives in; drafting and developing its adaptation plan, enhancing the plan's capacity, and implementing solutions that will boost the country's climate resilience. ^[20]

In tandem with this, in 2024, President Dr. Mohamed Muizzu launched several initiatives to enhance renewable energy adoption and improve waste management, focusing on preserving the nation's fragile environment. The total installed renewable energy capacity increased from 53 megawatts to 68 megawatts, intending to reach 33 percent of energy consumption from renewables over the next five years. ^[21] Significant progress was made in waste management, including establishing three regional waste management centres and launching the "Magey Saafu Raajje" initiative, which led to the construction of landfills on 17 islands. ^[22] Additionally, the government planted over 450,000 trees as part of a pledge to plant five million trees within five years. Efforts to protect the environment also included designating 93 areas, totalling 63,401 hectares, as protected zones and repairing meteorological equipment to enhance disaster risk mitigation. ^[23]

Irrespective of these efforts, the Maldives continue to be impaired by a potentially dystopian future due to climate change. The archipelago nation is considerably dependent on tourism and fishing. Hence, coral reefs hold a pivotal position under such circumstances. Maldives' coral reefs are essential for beach formation, coastal protection, and tourism. These coral reefs are under unprecedented threat as nearly all coral cover could disappear if global temperatures rise above 2°C. ^[24] Therefore, the Maldives aspire to continue national and international intervention to counter such an existential threat.

Way Forward

As the Maldives transitions into 2025, the nation must build on its achievements while addressing critical challenges to ensure sustainable growth and stability. Continued political stability will be vital in navigating economic challenges and maintaining the nation’s democratic foundations.

Economically, reducing fiscal vulnerabilities is imperative. The government should prioritize diversifying revenue streams beyond tourism and fisheries, accelerating small and medium enterprise (SME) growth, and implementing budgetary discipline to manage rising debt. Further, uncertainties like an extended global economic slowdown and factors like China being the largest creditor to Maldives and its dependence on tourists’ arrival from China ^[25] are likely to pose a risk to Maldivian economic outlook.

Diplomatically, maintaining balanced ties between regional powers is crucial. Under the Muizzu administration, Maldives aimed to diversify its international cooperation beyond the regional powers. However, the economic stressors have led Maldives to seek assistance from geographically closer alliances, especially India. As both India and Maldives approach the 60th anniversary of formal diplomatic relations in 2025, both shall reaffirm the continuation of their commitment towards strengthening and sustaining the pragmatic and longstanding relationship while working towards mutual growth, prosperity, and security of the region.

Environmentally, the Maldives must continue advancing renewable energy adoption, effective waste management, and coastal resilience initiatives. Expanding international collaboration, such as with the Green Climate Fund, will further support climate adaptation strategies.

A proactive, collaborative, and inclusive approach will enable the Maldives to navigate challenges and secure a prosperous future in 2025 and beyond.

Endnotes

^[1] Press Release. November 20, 2024. President ratifies Sixth Amendment to the Constitution of Maldives. The President’s Office. https://presidency.gov.mv/Press/Article/32225 [3]
^[2] World Bank. October 10, 2024. Maldives Needs Urgent, Comprehensive Economic Reforms to Maintain Development Progress. Press Release. https://www.worldbank.org/en/news/press-release/2024/10/09/maldives-needs-urgent-comprehensive-economic-reforms-to-maintain-development-progress [4]
^[3] Ministry of Finance. 2024. Government Budget. Economic Condition and Outlook. Summary. Page 2. https://www.finance.gov.mv/public/attachments/TyrM9tMpUlOB9mqgi6LeZ0F6qZb2DyTMfRSctBRR.pdf [5]
^[4] Ministry of Finance. 2024. Government Budget. Executive Summary. Deficit, Financing and Debt. Page vi.
https://www.finance.gov.mv/public/attachments/TyrM9tMpUlOB9mqgi6LeZ0F6qZb2DyTMfRSctBRR.pdf [5]
^[5]Ministry of Finance. 2023. Government Budget. Executive Summary. Deficit, Financing and, Debt. Page v.
https://www.finance.gov.mv/public/attachments/ofVUGdO2A7MBjk0nX3ttHFnelSNUg5IJk3O34ut1.pdf [6]
^[6]MMA Statistics Database. Official reserve assets.
https://database.mma.gov.mv/viya/series/3382 [7]
^[7]Rating Action Commentary. August 29, 2024. Fitch Downgrades Maldives to 'CC'. Fitch Ratings. https://www.fitchratings.com/research/sovereigns/fitch-downgrades-maldives-to-cc-29-08-2024 [8]
^[8] Zalif, Zunana. January 6, 2025. 2024 set to become most indebted year in Maldives’ history: Ameer. Raajje.
https://raajje.mv/161779# [9]
^[9] ibid.
^[10] Publications. Monthly statistics. Maldives Custom Service.
https://www.customs.gov.mv/Media/Materials/publications [10]
^[11] Ministry of Finance. 2024. Government Budget. Economic Condition and Outlook. Summary. Page 2.
https://www.finance.gov.mv/public/attachments/TyrM9tMpUlOB9mqgi6LeZ0F6qZb2DyTMfRSctBRR.pdf [5]
^[12] Media Briefings. October, 19, 2023. Transcript of Weekly Media Briefing by the Official Spokesperson. Ministry of External Affairs.
https://www.mea.gov.in/media-briefings.htm?dtl/37199/Transcript_of_Weekly_Media_Briefing_by_the_Official_Spokesperson_October_19_2023 [11]
^[13] Srinivasan, Meera. December 15, 2023. Maldives will not renew agreement for joint hydrographic survey with India: Top official. The Hindu. Business Line.
https://www.thehindubusinessline.com/news/maldives-will-not-renew-agreement-for-joint-hydrographic-survey-with-india-top-official/article67641440.ece [12]
^[14] Srinivasan, Meera. January 11, 2024. Maldives President Muizzu urges China to reclaim top spot in tourist arrivals amid boycott campaign in India. The Hindu.
https://www.thehindu.com/news/international/amid-boycott-campaign-in-india-maldives-president-muizzu-urges-china-to-reclaim-top-spot-in-tourist-arrivals/article67723866.ece [13]
^[15] Rajagopalan, P. Rajeswari. January 18, 2024. Maldives’ Muizzu Throws in With China. The Diplomat.
https://thediplomat.com/2024/01/maldives-muizzu-throws-in-with-china/ [14]
^[16] The Hindu. January 12, 2024. Chinese FM Wang Yi makes surprise visit to Maldives, holds talks with President Muizzu.
https://www.thehindu.com/news/international/chinese-fm-wang-yi-makes-surprise-visit-to-maldives-holds-talks-with-president-muizzu/article69089608.ece [15]
^[17] Roy, Shubhajit. October 7, 2024. Maldives President Muizzu meets PM Modi today, says India aware of fiscal situation, will ease burden. Indian Express.
https://indianexpress.com/article/india/maldives-president-mohamed-muizzu-meets-pm-modi-today-says-india-aware-of-fiscal-situation-will-ease-burden-9607272/ [16]
^[18] Bhansali, Umang. November 7, 2024. President Muizzu Visit to India amidst Economic Uncertainties: An Analytical Overview. VIF.
https://www.vifindia.org/article/2024/november/07/President-Muizzu-Visit-to-India-amidst-Economic-Uncertainties-An-Analytical-Overview#_edn25 [17]
^[19] UNEP. February 15, 2024. Maldives rests hope on new National Adaptation Plan to tackle climate change. Press Release. Climate Change. https://www.unep.org/gan/news/press-release/maldives-rests-hope-new-national-adaptation-plan-tackle-climate-change# [18]
^[20] Ibid.
^[21] PSM News. January 6, 2025. 2024: Maldives Moves Closer to Sustainable Energy, Environment, Waste Management. https://psmnews.mv/en/150314# [19]
^[22] Ibid.
^[23] Ibid.
^[24] World Bank Group. June 2024. Country Climate and Development Report. Executive Summary. The World Bank Group.
https://openknowledge.worldbank.org/server/api/core/bitstreams/ff0d23ef-4786-4c3d-9a47-520e13e677ce/content?_gl=1%2a13e8em2%2a_gcl_au%2aMTU0MTg5NTMzNS4xNzIxMjgyMTAw [20]
^[25] Press Release. May 8, 2024. Maldives Prepares to Address Economic Vulnerabilities, Urgent Fiscal Reforms Critical to Mitigate Risks. World Bank Group. Page 15.
https://www.worldbank.org/en/news/press-release/2024/05/08/maldives-prepares-to-address-economic-vulnerabilities-urgent-fiscal-reforms-critical-to-mitigate-risks [21]

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