The Mohamed Muizzu administration has opted to refinance US$75 million (approximately MVR 1.2 billion) of the US$378 million (approximately MVR 5.8 billion) Exim Bank of China loan undertaken to finance developments at Velana International Airport (VIA), documents shared on Monday with the Parliament’s Public Accounts Committee by the Ministry of Finance have shown.

While the Maldives will receive a grace period of three years, the payment period for the refinanced amount, due in full by 2030, will be six years. With a two percent interest rate, the full interest amount is estimated at US$3.3 million (approximately MVR 51 million).

The decision to refinance the loan was made as a result of discussions held during President Mohamed Muizzu’s visit to China last January.

While repayments for the VIA development loan were initiated in 2022, this recent refinancing means no payments on the loan will be due within the next three years. However, once repayments begin in 2027, the principal payments on the loan from 2015 will also come due.

The Ministry of Finance attributed the decision to refinance the loan to foreign currency reserves being adversely affected due to the country’s current financial status. The deferral of the loan for another three years will make it easier to sustainably manage finances, the Ministry said.

While the Maldives’ debt currently stands at MVR 126 billion, budget estimates indicate that the figure will rise to MVR 130 billion by the end of the year.