Chinese Ambassador to Maldives Zhang Lizhong, on Wednesday, assured that China remained prepared to assist Maldives to cultivate stronger bilateral ties.
Ambassador Lizhong revealed that a meeting was held with Minister of Foreign Affairs Abdulla Shahid on Wednesday to discuss debt sustainability, including the Chinese government's deferral of certain loan repayments for Maldives under the Group of Twenty (G20) Debt Service Suspension Initiative (DSSI).
The foreign minister revealed that China had expressed willingness to expedite deliberations on Maldives' DSSI in order to assist in the government's attempt to alleviate the economic repercussions of the COVID-19 pandemic.
"We remain confident on a positive outcome and strengthened partnership", stated Minister Shahid while thanking Ambassador Lizhong for constructive and productive discussions concerning debt service obligations.
Ambassador Lizhong's assurances were made in the wake of Parliament Speaker Mohamed Nasheed's claims 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 Tuesday, 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.
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.