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Speaker Nasheed requests leniency on China loan repayments

Mariyam Malsa
18 November 2020, MVT 12:40
Parliament Speaker Mohamed Nasheed speaking at the main hub of the Maldivian Democratic Party (MDP). PHOTO: MDP
Mariyam Malsa
18 November 2020, MVT 12:40

Parliament Speaker Mohamed Nasheed, on Tuesday, requested Chinese President Xi Jinping to grant leniency to Maldives concerning loan repayments.

Speaking at a gathering held at Maldivian Democratic Party (MDP)'s main hub to mark the two-year anniversary of the incumbent administration, Speaker Nasheed stated that the Chinese government had not moderated repayment conditions or terms, despite the prevailing negative economic circumstances amid the COVID-19 pandemic.

Describing a major country such as China strictly insisting on loan repayments from a small nation, according to pre-COVID terms, as 'unfair', the Parliament Speaker and former president appealed to the Chinese government to change their stance.

Speaker Nasheed revealed that Maldives was required to repay USD 83 million to China in the last two months of 2020 alone.

During his speech, Speaker Nasheed asserted that Maldives' current debt situation did not arise due to the actions of the incumbent administration, and instead was the result of the borrowing policies implemented by former President Abdulla Yameen Abdul Gayoom.

Noting that the government would have to pay MVR 5 billion to China in 2021 as repayment for loans taken during the previous administration, Nasheed disclosed that the state would have to take additional loans to cover the repayments.

Further criticizing the former government, Nasheed highlighted that there was no physical implementation of the project planned on the island of Fonadhoo, even though the state had sold bonds worth USD 35 million to finance the project. He noted that a related repayment of USD 2 million was due on December 15.

Chinese Ambassador to Maldives Zhang Lizhong has continued to refute Nasheed's claims and rhetoric regarding Maldives' loans from China.

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.

According to the Ministry of Finance, the national debt of Maldives is projected to reach MVR 82.8 billion by the end of 2021.

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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