Cash-strapped Maldives partners with Dubai firm

The Maldives has signed an agreement with a Dubai-based company that will see it invest $8.8 billion (€7.7 billion) to build a "financial free zone" on its soil, the government announced Monday. The new Maldives International Financial Centre includes a convention center, hotels, and residential and office towers, the archipelago's government said. The investment, which will not be subject to any local taxes, exceeds the Maldives' annual gross domestic product (GDP), estimated at $6.5 billion (€5.8 billion).

The Maldives has been facing serious financial difficulties since the Covid pandemic. Last year, the archipelago, renowned for its white-sand beaches and luxury resorts, rejected a bailout from the International Monetary Fund (IMF) and announced an austerity plan. However, earlier this year, the IMF urged its authorities to take further fiscal consolidation measures to avoid default.

The investment agreement was signed with MBS Global Investments, owned by wealthy Qatari Emir Nayef Bin Eid Al Thani. It is expected to boost the Maldives' GDP within four years and generate $1 billion in revenue for the archipelago by 2030, according to the government.

"By enabling the Maldives to diversify beyond the tourism sector, it will attract the financial players of tomorrow and make (the capital) Malé the leading business center in the Indian Ocean," the office of President Mohamed Muizzu said. According to official figures, the Maldives' external debt stood at $3.37 billion in the first quarter of 2024, or about 45% of its gross domestic product. China held about 20% of its external debt, and India just under 18%.