Muizzu's bid to revive FTA with China may lead to debt crisis in Maldives
Maldives President Mohammed Muizzu has proposed to revive the free trade agreement with Beijing, but the move could push Male towards a debt trap.
China's current share of Maldives total debt is 37% and there are fears that FTA will further increase debt share, pushing Maldives into a Sri Lanka-type crisis, ET has learnt. The Covid pandemic, notwithstanding India's generous assistance to the island nation, has dented Maldivian economy, according to observers.
The World Bank in its October report warned if Maldives gets further closer to China, it could spell trouble for the country as it already owes $1.37 billion to Beijing. China is Maldives' biggest bilateral creditor, ahead of Saudi Arabia and India.
The erstwhile Ibu Solih government was toying with the idea of scrapping FTA that was established during the regime of former president Abdulla Yameen. The Solih government believed the agreement should not have been signed in the first place and said it was detrimental to the country's economy.
The deal allowed goods from China to be imported without any duty. Fisheries comprise a big part of export for Maldives, but fishermen were not benefiting from FTA, alleged the previous Maldives government.
Meanwhile, Chinese President Xi Jinping on Wednesday held talks with his Maldivian counterpart in Beijing, following which the two countries signed 20 key agreements, including one on tourism cooperation and elevated their bilateral ties to a comprehensive strategic and cooperative partnership.
They signed agreements on disaster risk reduction, blue economy, strengthening investment in the digital economy and the Belt and Road Initiative. China will also grant
