The implementation of a free trade agreement (FTA) signed between the Maldives and China will begin in September, President Dr. Mohamed Muizzu said on Friday night, expressing hope of signing such an agreement with India as well.
President Muizzu said at the official function held to mark the 59th anniversary of independence that in addition to China, efforts are also underway to enter into FTAs with Turkiye and Britain. The government hopes to sign an FTA with India as well, he said.
In May this year, Economic Minister Mohamed Saeed said that India had proposed an FTA. But India denied it at the time.
Efforts to enter into an FTA with China began during former President Abdulla Yameen’s government. But the preceding Maldivian Democratic Party (MDP) did not wish to enforce the agreement.
The result of implementing the FTA would be the elimination of tariffs for a total of 7,897 items in nine sectors, including 298 fisheries products, President Muizzu said. When the FTA comes into force, an import duty will not be charged for exporting these products from the Maldives to China.
When an FTA is signed with Turkiye, duty concessions will be granted for 53 exports from the Maldives with zero tariffs for some items, the President said.
The government is also working on currency swap agreements with China and India to help local businesses, President Muizzu said. This would pave the way for alleviating the dollar shortage and assuring economic sovereignty, he said.
President Muizzu speaking at Independence Day function. — Photo: President’s Office
Green signal for debt relief from China
With the FTA due to take effect in September, China has given the green light on deferring loan repayments for five years, President Muizzu said.
A large portion of the loans taken from China’s Exim Bank for development projects during former President Yameen’s government must be repaid in 2026. The Maldives will face a serious fiscal crisis if the loans are not restructured.
Technical work on restructuring the loans taken from China’s Exim Bank is ongoing, which was how President Muizzu believed that “foreign policy should be shaped to protect the country’s independence.”
China and India provides the most assistance in repaying the country’s debt, President Muizzu said, thanking both countries.
“I thank the Chinese government and the Indian government on behalf of the Maldivian people for their cooperation with this effort to strengthen the economy, to assure our economic sovereignty, for the sake of the Maldivian people,” the President said.
After coming to power, the current government paid USD 50 million out of USD 200 million worth of loans provided by India on a rollover basis. But as fiscal constraints worsened, the government made a request to India and arranged for the rollover of USD 50 million.
India has facilitated a food import quota for two years as well as access to the remainder of a line of credit, President Muizzu said, referring to a USD 1 billion line of credit arranged during the MDP government.
UAE has also agreed to defer loan repayment for five years, President Muizzu said.
“We are working to implement things as planned in order to assure the economic sovereignty I spoke about and to manage the economy by lightly dividing up the loans we took for various matters,” he said.
Over the past eight months, MVR 3.8 billion was spent from state income to repay loans without printing money, President Muizzu said.
