Published: 19th Oct, 2020
Following up on India’s announcement of a $500 million package to the Maldives, the Exim Bank of India and the Maldives’s Ministry of Finance signed an agreement for $400 million in Male.
Context
Following up on India’s announcement of a $500 million package to the Maldives, the Exim Bank of India and the Maldives’s Ministry of Finance signed an agreement for $400 million in Male.
About
- Line of Credit is basically an agreement between a borrower and the lender whether it is a bank or a NBFC.
- According to this agreement the lender is ready to lend a maximum amount to the borrower.
- The borrower can withdraw money any time he or she want until they reach the maximum limit.
- The Line of Credit is not a ‘grant’ but a ‘soft loan’.
- It is provided on concessional interest rates to developing countries, which has to be repaid by the borrowing government.
- It also helps to promote exports of Indian goods and services, as 75% of the value of the contract must be sourced from India.
The Agreement
- The line of credit (LoC) will fund the Greater Male Connectivity Project (GMCP), a key pledge of President Ibrahim Solih.
- India has also pledged a grant of $ 100 million for the initiative.
Greater Male Connectivity Project
- Maldivians have often highlighted the disparity between capital Male and the atolls that can be reached only via boat service.
- The GMCP, a 6.7 km bridge and causeway network connecting Male, with islands Villingili, Gulhifalhu and Thilafushi, is the second significant connectivity project in the Indian Ocean archipelago, coming two years after the China backed $200 million Sinamale Bridge, or the China-Maldives Friendship Bridge connecting airport island of Hulhule with the capital, was inaugurated.
- The Greater Male Connectivity Project will lead to greater possibilities. It is the gateway to a more developed and economically-resilient nation.
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