Some Indian media outlets have reported that the neighboring country’s government is reconsidering its financial assistance to the Maldives.

According to reports, the government of India has reached the decision in response to the Maldives implementing the Free Trade Agreement (FTA) with China starting this month.

Some estimates suggest that the Maldives will lose USD 30-40 million annually due to the reduction of duties on goods imported from China under the FTA.

Reports also state that it is believed that this Free Trade Agreement between two countries with vastly different economic and productive capacities will result in significant losses for the Maldives.

In addition to this, experts believe that the Preferential Trade Agreement (PTA) signed by the Maldives with Turkey in November will also result in revenue losses for the Maldives. This agreement is set to be implemented on a date agreed upon by both parties in the first quarter of 2025.

According to Indian media outlets, although India has provided temporary relief in repaying the debt owed by the Maldives, concerns have arisen about the ability to repay the debt due to the incumbent administration’s failure to clearly disclose information about the country's debt situation and not implementing economic reforms.

International financial institutions note that India's assistance has been crucial in helping the Maldives overcome the economic challenges posed by the global Covid-19 pandemic and the resulting loss of tourism revenue. The substantial financial aid provided by India has significantly improved the Maldives' financial situation and helped mitigate economic shocks.

The Indian government has rolled over two treasury bills worth USD 50 million for the Maldives and USD 6.4 million in interest, in addition to a currency swap agreement of USD 400 million and 3,000 crore Indian rupees.

During the president’s visit to India last October, he stated that discussions would commence on a Free Trade Agreement focused on trade in goods and services between the two countries.

Critics have been saying that the incumbent administration is characterized as a government pursuing directionless policies in foreign relations.