The Maldives has entered into an agreement with China to avoid default

The Maldives has found a potential way out of its financial crisis with a new deal with China that should help the country avoid default. According to Nikkei Asia, the Central Bank of China and the government of the Maldives have signed an important agreement that will strengthen economic cooperation and support payments in local currencies.

The People's Bank of China and the Ministry of Economic Development and Trade of the Maldives signed a memorandum of understanding aimed at increasing the volume of settlements in local currencies for current transactions and investments. However, the details of the agreement have not yet been disclosed.

Chinese Foreign Ministry spokesman Mao Ning stressed that China will continue to support the economic and social development of the Maldives within its capabilities. This can become a decisive factor for the stabilization of the financial situation of the island state.

Recently, the Maldives has attracted the attention of the international community due to doubts about the ability to pay its international debt. The bulk of the Maldives' debt comes from loans from regional players, including China and India, which have lent the islands $1.37 billion and $124 million respectively.

Changes in the political landscape of the Maldives also play an important role in the situation. President Mohamed Muizza's party won parliamentary elections in April, which may bring the Maldives closer to China and distance itself from its traditional partner, India.

Market participants note that the increase in the value of Maldives bonds is partly due to the expectation of additional support from China, which can improve the economic situation in the country and reduce the risks of default.