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‘Delhi, Male ink $400-mn pact for connectivity’

  • Category
    Economy
  • Published
    21st 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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