The government of the Maldives has negotiated an agreement with India so that importers of basic food items and other essential commodities will be able to obtain letters of credit (L/Cs) denominated in US dollars.

The arrangement is one of several measures introduced by the island country seeking to alleviate an ongoing US dollar shortage.

Indian imports

Underpinning the arrangement is a US$50 million trade credit facility provided to the Maldives by the Indian government.

Under the terms of the credit, half of the money should be allocated to goods imported from India.

The L/Cs, which are guaranteed by the State Bank of India, will allow importers to order goods from India in advance of payment.

Eligibility

Officials say the precise rules for determining eligibility criteria for importers under the scheme are still being worked out.

Once the regulations are finalised, senior officials at the ministry of finance and treasury as well as the ministry of economic development will form a committee to review applications.

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