China and Maldives have signed a new financial agreement amid the rising debt crisis in Maldives.
Beijing:
China and Maldives have signed a new agreement today that allows Beijing to lend more financial support to the already debt-distressed nation. China’s central bank has said the pact will also help strengthen trade and investment.
The memorandum of understanding or MoU between the People’s Bank of China and Maldives’ Economic Development Ministry allows Beijing and Male to boost direct investments and permit local currency settlement for current account transactions.
China has not revealed anything else about the agreement. Maldives, which is already facing a massive debt, is barely managing to avoid default.
In a statement after the agreement, China’s foreign ministry said it has active communication with Maldives over its mounting debt to Beijing and is increasing its financial cooperation.
“China will, as always, provide support and assistance to the economic and social development of the Maldives within its capability,” Mao Ning, a Chinese foreign ministry spokesperson said.
MALDIVES’ RISING DEBT WORRY
Maldives’s debt concern is a serious one and is rising at a rapid pace. The Maldivian government vowed on Thursday that it will not become the first nation to default on Islamic sovereign debt by failing pay $25 million which is due next month.
According to the World Bank, Maldives’ biggest lender is China and the debt it owes to Beijing has risen to above $1.3 billion. China has been in talks with Maldives to lend even more “support”.
Maldives’ debt crisis has come with the change in government and its political and geopolitical stance. The new government in Maldives has increasingly been pro-China despite its rising debt to the nation.
Maldivian President Mohamed Muizzu’s party managed a landslide win the the parliamentary elections held in April this year. The outcome has led to a major shift in stance with the island nation’s ties growing rapidly with China and moving away from its traditional partner, India.
Maldives has been criticised in recent weeks over doubts that it may not be able to pay back its debt.
INDIA-MALDIVES TIES STRAINED
Maldivian President Mohamed Muizzu will travel to India on an official visit “very soon”, his spokesperson had said.
The announcement of Mr Muizzu’s visit came on a day when two junior ministers, suspended in January for derogatory comments against Prime Minister Narendra Modi, resigned from the government.
Mr Muizzu, known for his pro-China leanings, visited New Delhi on June 9 to attend Prime Minister Modi’s swearing-in ceremony. Unlike his predecessors, who made the first port of call to New Delhi after assuming office, Mr Muizzu travelled to Turkiye first and to China for his first state visit in January.
India’s relationship with the Maldives came under strain since Mr Muizzu took charge as the President. Within hours of his oath, he had demanded the withdrawal of Indian military personnel manning three aviation platforms gifted by India to the Maldives. After talks between the two sides, the Indian military personnel were replaced by civilians.
Things escalated after three Maldivian deputy ministers made controversial remarks regarding India and Prime Minister Modi on social media.
Maldives Foreign Ministry distanced itself from their remarks, saying they do not represent the views of the Male government.
The three junior ministers were suspended, and two of them – Mariyam Shiuna and Malsha Shareef – have now resigned.