Maldives seeks diplomatic solution to Chinese debt burden
The Maldives is seeking a “diplomatic” solution to restructure its Chinese debt as the small but strategically located atoll nation struggles with repayments, the foreign ministry said.
Former strongman president Abdulla Yameen relied heavily on Beijing to provide financial support during his five-year term and his successor’s party has accused China of land grabbing in the country.
Foreign Minister Abdulla Shahid told reporters on Thursday that China was a generous donor, but the previous Maldivian government had borrowed heavily without adequate provision for repayments.
Speaking in Colombo, the capital of Sri Lanka, he said direct loans as well as government guarantees to state-owned companies on their loans from China amount to around $1.4 billion in debt.
It is a heavy burden, he said, for the nation of 340,000 Sunni Muslims.
“The borrowings of the previous government (of President Abdulla Yameen) were unreasonable and got us into trouble,” Shahid said. “But, we can solve this mess through diplomatic means.”
The pro-Beijing Yameen was last month jailed for five years and fined $5 million for corruption during his tenure which ended late last year.
“We may have debt restructuring in the future. I am in contact with the Chinese government and I am confident that we can reach a diplomatic agreement.
Shahid is visiting Sri Lanka for talks with Sri Lanka’s new leaders – President Gotabaya Rajapaksa and his brother Prime Minister Mahinda – who also borrowed heavily from China during their previous term between 2005 and 2015.
The former Sri Lankan government handed over control of the port of Hambantota in the south of the island to a Chinese company on a 99-year lease in December 2017.
He said he was unable to repay a $1.4 billion debt from Beijing to build the loss-making port.
The port was one of a series of infrastructure projects in Asia, Africa and Europe funded under China’s Belt and Road initiative, which critics say is burdening nations with debt.
The new president has publicly stated that he opposes ceding control of a strategic asset to China and has said he wants the deal to be renegotiated. He did not give details.