Maldives signs pact with China bank for currency settlement framework

Maldives on Friday signed a Memorandum of Understanding (MoU) with the People’s Bank of China (PBOC) to establish a framework aimed at promoting the settlement of current account transactions and direct investments in local currencies.

This agreement is expected to facilitate smoother trade and investment relations between the two countries.

The Ministry of Economic Development of Maldives, in a statement, announced that the MoU will enable more efficient currency settlements in local currencies, which will benefit traders engaged in imports from China and promote increased cross-border investments.

The ministry also highlighted that this agreement reflects the Maldives’ efforts to enhance economic openness and strengthen trade relations with key international partners.

The signing of the MoU follows the state visit of President Mohamed Muizzu to China in January.

During the visit, President Muizzu and Chinese President Xi Jinping discussed strengthening the comprehensive strategic cooperative partnership between the two nations.

Their dialogue focused on deepening bilateral economic collaboration, a commitment reinforced by this new currency settlement framework.

The ministry also noted that China remains one of the Maldives' largest trade partners, with bilateral trade valued at over $700 million. China is also the largest source market for tourists to the Maldives.

Maldives owes China $1.37 billion, according to World Bank figures. This is 20% of the country’s total external debt.