President Ibrahim Mohamed Solih, on Tuesday, stated that the Chinese government has agreed to partially suspend debt repayment, for a period of approximately four years.
Speaking at a press conference held at the President's Office, he revealed that the suspension would be applicable to USD 600 million in loans directly acquired by the government.
President Solih added that Chinese Ambassador Zhang Lizhong was prepared to discuss repayment terms for the remaining loans, which were secured via state-owned companies.
In addition to the suspension, the Chinese government has reduced this year's loan repayment figure for Maldives to USD 75 million as part of the G20 debt relief programme. Maldives was initially scheduled to repay USD 100 million to China.
Overall, the USD 1.5 billion acquired as loans from China is equivalent to 45 percent of Maldives' national debt. This includes loans from the Export–Import Bank of China, Industrial and Commercial Bank of China (ICBC) and China Development Bank (CDB).
The majority of these loan agreements were signed during the presidency of Abdulla Yameen Abdul Gayoom.
The Ministry of Finance projected that total state debt excluding guarantees would increase to MVR 70 billion by the end of 2020, accounting for 86.6 percent of Gross Domestic Product (GDP).
Furthermore, economic repercussions caused by the COVID-19 pandemic are forecasted to increase state deficit to MVR 13 billion compared to the MVR 5.9 billion originally stated in the 2020 State Budget. The ministry also predicted an overall 115 percent drop in GDP, along with 81.3 percent for nominal GDP.
In April, the World Bank estimated that Maldives would be the worst-hit country in the South Asian region by the fiscal and economic repercussions of COVID-19.
In a bid to counteract the pandemic's financial impact on the local economy, the Maldivian government introduced an economic relief fund with MVR 2.5 billion intended to prevent the closing down of local businesses and the loss of jobs.