The condition of Maldives has already become very decaying due to Corona epidemic. Due to the Corona crisis on the economy here, which was dependent on tourism, the industry came to a standstill. In such a situation, where on one side the pressure to repay debt from China is increasing, on the other hand, the challenge of improving its economy. The Maldives has sunk so much in Chinese debt that China’s share in the total debt taken by it is 53 percent.
This compulsion of Maldives can be understood from the statement of the former President and parliamentary speaker Mohammad Nasheed. Taking a growing debt burden, Nasheed targeted China and said that even if we sell our grandmother’s jewelry, we will not be able to get rid of her debt. China’s debt to Maldives is 3.5 billion dollars.
Discussing 2021 budget in Majlis today. 🇲🇻 debt repayments next year will amount to 53% of government revenue. Over 80% of debt repayments will go to China. Totally unaffordable. Even if we sell our grandmother’s jewelry, we won’t be able to afford these repayments. pic.twitter.com/Vc2v8n2Kov
– Mohamed Nasheed (@MohamedNasheed) November 18, 2020
The reason for this is especially because the previous Maldives government was inclined towards Beijing. During the previous government, the government and companies took large-scale loans from China for infrastructure projects in Maldives. According to experts, when Abraham Mohammad Solih became the President of Maldives in the year 2018, the first challenge before him was to get an idea of how much debt China owes to his country.
The Central Bank of Maldives estimated that China’s $ 600 billion debt is on the Maldives government. So at the same time, Maldives companies took loans of $ 900 billion from China. Since the Maldives government was made a guarantor in all this debt, if these companies fail, their debt will have to be repaid by the government itself. This is the reason for the debt crisis looming on the Maldives.
– The public believes that
Last September, the Maldivian government began talks with China about the deadline for repaying the debt. But, then the Chinese Ambassador in Male said that China has stopped the bilateral government debt to Maldives under the G-20 debt withdrawal initiative. But the benefits of this did not go to the Maldivian companies, which have taken loans of millions of dollars. Due to this, a big company of Maldives fell behind in debt repayment schedule. He had taken a loan of $ 12.7 million. Following this default, there was news in July that the Import-Export Bank of China has asked the Government of Maldives to immediately repay the loan of one million dollars.