India, China have agreed to cooperate in efforts to pay for imports in local currency, says Maldives

India and China have agreed to cooperate in efforts to pay for imports in their respective currencies instead of US dollars, said Maldives on Wednesday. This move would save the island nation almost 50 per cent of the annual $1.5 million imports bill from the two countries.

Maldives’ Economic Development Minister Mohamed Saeed met Indian High Commissioner Munu Mahawar recently to discuss the matter, following which the Indian High Commissioner said New Delhi would cooperate in arranging for settlement of import payments in Indian rupee. 

Saeed said he received a letter from China’s Commerce Ministry too with Beijing providing assurance it will cooperate in allowing the option to settle import payments in yuan. 

Maldives imports goods worth $780 million from India and $720 million from China, as per the minister who had said in April that Maldives was discussing payments for imports in rufiyaa with India and China. 

“We are negotiating with both sides to make arrangements for us so that, for example, for imports from China, the shipping company can bring the invoice and the payment can be settled by converting Maldivian Rufiyaa to their local currency through the banks, instead of US dollar,” Saeed said.

“If we can arrange up to USD 300 million from each country, that means USD 700 million. This means we can eliminate the reliance on US dollars by that amount in the future. That will reduce the demand for dollars. And the future demand for dollars will continue to fall,” Saeed said, as reported by Sun.mv.

The new Maldivian administration under President Mohamed Muizzu said that the country’s economic situation was ‘alarming’ but the government is implementing strong fiscal reforms.