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Chinese ambassador dismisses Maldives debt trap as 'fiction'

Shahudha Mohamed
17 September 2020, MVT 20:17
Sinamale' Bridge connecting capital Male' to reclaimed suburb Hulhumale'. The bridge, built during former President Yameen Abdul Gayoom's administration was funded by Chinese loans. PHOTO: HUSSAIN WAHEED/ MIHAARU
Shahudha Mohamed
17 September 2020, MVT 20:17

Chinese Ambassador to Maldives Zhang Lizhong dismissed the allegations that Maldives was facing a Chinese debt trap as "a fiction".

In an interview given to BBC News, published on Wednesday, the ambassador asserted that "China never imposes additional requirements to the Maldivian side or any other developing country, which they do not want to accept or against their will".

Former president and current Speaker of Parliament Mohamed Nasheed had claimed that Maldives owes China a debt of USD 3 billion for the development projects completed during the administration of Nasheed's successor, Abdulla Yameen Abdul Gayoom.

However, Ambassador Zhang described that Nasheed's debt figure as "highly exaggerated".

As per Nasheed, the figure was the sum of government-to-government loans, funds given to state enterprises as well as private sector loans guaranteed by the Maldivian government.

BBC reported that the former president also proclaimed that the cost of the Chinese funded projects was inflated, and therefore, the debt on paper was higher than the money actually received by the government.

Although he had not publicised any documents to support the fact, Nasheed claimed that the actual amount received from China is USD 1.1 billion.

Furthermore, Nasheed expressed concern to BBC over losing islands to Chinese investments where resorts and hotels are being constructed under Maldivian and Chinese partnerships.

"It is very easy to see these Maldivian partners don't have the necessary finance to be able to be a partner in such a venture, So, the Chinese partners would buy it out in no time. I can see the islands going to them very quickly," the Parliament Speaker told BBC.

However, Ambassador Zhang reiterated that China does not attach any pre-condition for the loans. Asserting that "it does not happen and will not happen", the ambassador speculated that Nasheed may not have received "the right information".

Current opposition party People's National Congress (PNC)'s Vice President Mohamed Hussain Shareef denied Nasheed's claims as well, describing them as "baseless fear-mongering".

During his statements to BBC, Nasheed's concerns mainly revolved around Maldives seeing a similar fate as neighbouring Sri Lanka.

Sri Lanka built a USD 1.5 billion port in Hambantota with Chinese loans, but defaulted on the loan commitment a few years later after failing to pay back the required amount.

This resulted in a Chinese state-run company acquiring 70 percent stake of the port on a 99-year lease. Moreover, China also secured 15,000 acres of land around the port to establish an economic zone.

Stating that the business plans of Chinese funded projects lack any indication to suggest loan repayment, Nasheed posed the question of whether the assets can "produce enough revenue to pay back the debt".

Echoing Nasheed's sentiments, US Secretary of State Mike Pompeo, last year, described China as a country securing "corrupt infrastructure deals in exchange for political influence" and using "bribe-fuelled debt-trap diplomacy".