Faced with a mounting economic crisis, the cash-strapped Maldives is looking to renegotiate its piles of Chinese debt
- The new government of President Ibrahim Mohamed Solih has called for a review of Chinese-bankrolled projects initiated under his predecessor
The Maldives foreign minister will visit Beijing before the end of 2018, officials said on Wednesday, likely seeking to renegotiate the archipelago’s Chinese debt.
China has loaned billions of dollars to countries around the Indian Ocean and beyond for infrastructure development, stoking fears of a debt trap.
The new Maldives government of President Ibrahim Mohamed Solih has called for a review of Chinese-bankrolled projects initiated under his predecessor Abdulla Yameen.
Former president Mohamed Nasheed, now Solih’s mentor, has accused China of a land grab in the strategically placed Indian Ocean archipelago, and called a free-trade agreement (FTA) signed with Beijing under Yameen one-sided.
The announcement of Foreign Minister Abdulla Shahid’s upcoming trip to China came after he held talks with the Chinese ambassador in Male, Zhang Lizhong, on Monday.
The duo “discussed progress of ongoing Chinese projects … and future cooperation in areas of importance to the Maldives,” the foreign ministry said without giving further details.
China’s ambassador told the local Avas.mv website that in fact only about half of the Maldives’ external debt pile of US$1.2 billion was owed to Beijing.
He said the loans carried an interest rate of 2 per cent and a five-year grace period, while also disputing claims of a debt trap.
“We have nothing to gain if a friendly country falls into debt,” he said. “There is no single (piece of) evidence to support the so-called debt trap claim.”
Solih’s Maldivian Democratic Party (MDP) has said that the country owes China around US$3 billion.
On Tuesday in Beijing, Chinese foreign ministry spokesman Geng Shuang said the FTA, which still has to be ratified by the Maldives parliament, was “a mutually beneficial and win-win” agreement.
“We believe that the Maldivian government will make the right choice.”
Neighbouring Sri Lanka was forced to hand over a loss-making port to a Chinese state-owned company last year on an 99-year lease after failing to repay a US$1.4-billion Chinese loan.
Soon after taking office at the weekend, Solih warned of a “dire” economic crisis as he turned to India for help, signalling an end to the pro-China stance of his predecessor Yameen.
Solih, who was little known before his surprise election victory, briefed India’s Prime Minister Narendra Modi “on the dire economic situation” according to a joint statement after Saturday’s swearing-in ceremony attended by Modi.
India has been the country’s traditional main ally but Yameen, whose iron-fisted rule saw a string of political rivals locked up or exiled and the press muzzled, moved closer to China.