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Beijing: China and the Maldives have signed a new financial agreement today, enabling Beijing to offer increased financial aid to the debt-ridden nation. According to China's central bank, this deal will also enhance trade and investment opportunities.
The memorandum of understanding (MoU) between the People's Bank of China and the Maldives' Economic Development Ministry aims to boost direct investments and facilitate local currency settlements for current account transactions.
China has yet to disclose further details about the agreement. The Maldives, grappling with significant debt, is struggling to avoid default.
Following the agreement, China's foreign ministry stated that it is actively engaging with the Maldives over its growing debt to Beijing and is expanding financial cooperation. "China will continue to support and assist the Maldives' economic and social development to the best of its ability," said Mao Ning, a spokesperson for the Chinese foreign ministry.
MALDIVES' ESCALATING DEBT CONCERNS
The debt crisis in the Maldives is worsening rapidly. On Thursday, the Maldivian government pledged not to become the first country to default on Islamic sovereign debt by missing a $25 million payment due next month.
The World Bank reports that China is the Maldives' largest lender, with the island nation owing over $1.3 billion to Beijing. China has been negotiating to provide additional support.
The Maldives' debt issues have been exacerbated by a recent change in government and shifts in its political and geopolitical alignment. The new administration in the Maldives has grown increasingly pro-China, moving away from its traditional ally, India.
The victory of President Mohamed Muizzu's party in the April parliamentary elections has led to a significant realignment of the island nation's foreign relations, strengthening ties with China.