India has granted a further US$25million to the Maldives as part of the $US100million standby credit facility agreed during last November’s official visit from Prime Minister Manmoham Singh.
Indian High Commissioner D M Mulay signed the agreement with Minister of Finance and Treasury Abdulla Jihad at the Indian High Commission, local media reported.
Mulay, who was not responding to calls at the time of press, said that the deal represented the third instalment of the credit facility, with the previous two instalments having amounted to US$50million.
The previous tranche of US$30 million was released following President Waheed’s first official visit to India in May.
Mulay is also reported to have said that the rest of the promised credit will soon be handed to the Maldivian government: “The paperwork on the agreement is being processed now, the amount will soon be awarded to the Maldives,” Haveeru quoted Mulay.
A standby line of credit is normally forwarded to countries which have reached macroeconomic sustainability but experience short term financing issues.
The release of this credit comes just days after Waheed completed his first official state visit to China.
The loans, equal to nearly one quarter of the Maldives’ GDP, are said to include $150 million (MVR2.3billion) for housing and infrastructure, with another $350million (MVR5.4billion) from the Export-Import Bank of China, reported Reuters.
Jihad told Minivan News last week that, despite securing this money from China, the government would still be considering austerity measures which are being considered in order to reduce the state’s budget deficit.
With income lower and expenditure higher than predicted, this year’s budget deficit had been forecast to reach MVR9.1billion (US$590million), equivalent to around 28 percent of nominal GDP.
India has traditionally enjoyed close ties with the Maldives, although there have been increasingly strong links between the Maldives and China, largely due to the number of Chinese tourists visiting the Indian Ocean nation.
A Chinese embassy opened in Male’ in time for the opening of the SAARC summit last November, reciprocating the opening of a Maldivian mission in Beijing in 2007.
Indian officials were reported at the time as having concern that the move was part of China’s “string of pearls” policy which supposedly involves Chinese attempts at naval expansion into the Indian Ocean.
After the awarding of the Chinese loan, however, former Foreign Minister and current UN Special Rapporteur to Iran, Dr Ahmed Shaheed was keen to play down any suggestions that the Maldives was about to significantly change its foreign policy priorities.
“This is very much in keeping with past policy. The lines so far drawn have demonstrated that the Maldives remains primarily SAARC focused, followed by trading partners in the EU and Singapore. China has moved into this second category,” he added.
“Nothing will change the fact that we are only 200 miles from Trivandrum,” said Shaheed.
When asked upon his recent return from Sri Lanka what the Maldives’ policy was regarding Sino-Indian competition in the region, President Waheed is said to have responded that the policy of a small nation like the Maldives ought to be to avoid too great an involvement in geopolitics.