Chinese Ambassador to Maldives Zhang Lizhong, on Friday, refuted assertions by Parliament Speaker Mohamed Nasheed regarding debt repayments due within the upcoming 14 days.
According to Nasheed, the Maldives Treasury was mandated to repay more that USD 15 million to Chinese banks throughout the next two weeks.
Expressing concern that no leniencies were granted regarding the repayment period, the parliament speaker stated that the figure represented 50 percent of Maldives' projected state income for the next 14 days.
However, Ambassador Lizhong clarified that no USD 15 million payment was due in the period Nasheed had described, as per information provided by the banks.
Good news. According to the feedback from banks,there is no such 15 million payment due in 14 days. Check the account book and save it for the budget. Cheers. https://t.co/SOygyvbN6r
— Amb. Zhang Lizhong (@AmbassadorZhang) December 11, 2020
The parliament speaker and former president has long maintained his stance that Chinese loans represent a serious economic threat to Maldives, warning that China may attempt to take over the country if the government failed to settle debts.
Earlier in November, Nasheed asserted that the Chinese government had not moderated repayment conditions or terms, despite the prevailing negative economic circumstances amid the COVID-19 pandemic.
Speaking at a gathering held at Maldivian Democratic Party (MDP)'s main hub to mark the two-year anniversary of the incumbent administration on November 17, Nasheed had described a major country such as China strictly insisting on loan repayments from a small nation, according to pre-COVID terms, as 'unfair'. He went on to request Chinese President Xi Jinping and the country's government to change this stance.
Speaker Nasheed had expressed concern that 80 percent of the MVR 4 billion allocated for debt repayment in the 2021 State Budget would be diverted to repaying loans from China.
In response, Chinese Ambassador Lizhong assured that assured that China remained prepared to assist Maldives to cultivate stronger bilateral ties. He also met with Minister of Foreign Affairs Abdulla Shahid to discuss debt service obligations including the Chinese government's deferral of certain loan repayments for Maldives under the Group of Twenty (G20) Debt Service Suspension Initiative (DSSI).
Following Nasheed's speech, the President's Office highlighted that China has delayed certain loan repayments for 2020 under G20's DSSI, which reduced Maldives' repayments figure to USD 75 million from the initial USD 100 million.
Under the World Bank's initiative, G-20 countries made commitments to the DSSI in April, pledging to suspend debt service for low-income countries on official bilateral credits.
According to the Ministry of Finance, national debt is projected to reach MVR 70.3 billion by the end of 2020 while this figure would rise to MVR 82.8 billion by the end of 2021. A total of MVR 37.5 billion out of this figure is expected to be external debt.
Heavily reliant on tourism for revenue, the restrictions on international travel over COVID-19 left Maldives vulnerable to severe economic repercussions. In mid-April, the World Bank projected that Maldives would be the worst-hit economy in the South Asian region due to the pandemic.
The Maldivian government estimates a shortfall of approximately USD 450 million (MVR 6.9 billion) in foreign currency and a state deficit of MVR 13 billion in 2020 as a result of the COVID-19 pandemic's impact on the tourism industry.
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