The Government of Maldives has refinanced USD 75 million of a USD 378 million loan initially taken from China’s Export-Import (EXIM) Bank in 2015 for the development of Velana International Airport (VIA). The refinancing agreement was executed on 23rd September 2024.
Refinancing involves the withdrawal of an additional loan to repay an existing debt, allowing the terms of the original loan to be adjusted. In this case, the refinanced amount totals USD 75,767,599.98.
Details of the refinancing agreement were revealed in a letter from the Ministry of Finance, which was presented during a meeting of the Parliament’s Public Accounts Committee earlier this week. According to the agreement, the first interest payment will be due on 21st January 2025, with subsequent bi-annual payments scheduled for 21st January and 21st July each year. The interest rate on the refinanced loan is set at two percent, amounting to USD 3.3 million.
The refinanced amount is set to be repaid over a six-year period, which includes a three-year grace period. The full repayment of the loan is due by 2030.
The initial loan, taken on non-conditional terms, was secured to upgrade the country’s main international airport, a critical infrastructure project. The Ministry of Finance stated that the primary purpose of refinancing this portion of the loan was to ease the pressure on the government’s short and mid-term debt obligations, providing more financial flexibility.
