‘Debt Trap’ Fear Of China Haunts Maldives, Govt. Negotiating With Dragon
New Delhi : The Maldives government, facing the Coronavirus epidemic, is in a major economic crisis. China’s Export-Import (Exim) Bank has asked the government of President Ibrahim Solih to pay $ 10 million debt. According to N. Sahitya Murthy of the Observer Research Foundation, this amount is probably an installment of $ 127 million loan given to Sun Group under the ‘sovereign guarantee’. The economic situation in Maldives is already falling. If he refuses to repay the loan, his credit will be discounted. If it pays, the value of the currency will fall and foreign trade will be affected.
In the name of Belt and Road Project, China traps countries in debt and it did the same with Maldives. Now his plan seems to be successful. According to the Maldives government, it has a huge debt of $ 3.1 billion given by China. That too when the entire economy of Maldives is worth about $ 5 billion. In the Corona crisis, Maldives is now afraid of default.
According to a news report, Abdullah Yameen, who assumed power in Maldives in 2013, was extremely close to China. He took a huge loan from China to kick-start the Maldives’ economy. Yameen, engaged in intrigante with China, jailed most opposition leaders, including former President Mohammad Nasheed. However, Yameen lost the 2018 election and the Maldivian Democratic Party won. Ibrahim Solih became President. After this, Nasheed returned to politics again. The government in power was shocked when he saw the account.
According to Nasheed, the former President of Maldives and now Speaker of Parliament, Maldives had a debt of $ 3.1 billion from China. This loan was given to the government, government companies as well as private companies, whose guarantee was taken by the Maldives government.
Nasheed now expresses concern that his country is stuck in a debt trap. He says that whatever projects were started with these funds, they are not worth it to generate revenue to repay the debt. He also says that this loan on paper is more than the amount actually received.
Nasheed fears that if his country defaults, then the Sri Lankan situation may occur. Significantly, Sri Lanka had to mortgage its Hambantota port to China for 99 years when the debt was not repaid. Apart from this, to make Sri Lanka a Special Economic Zone, it also had to give 15,000 acres of land.
Nasheed says the Maldives economy is worth about $ 4.9 billion. Chinese debt accounts for more than half of the economy. If the government’s revenue declines, it will be difficult to repay the loan by 2022-23.
Maldives businessman Ahmed Shiam took a loan of 127.5 million from Export-Import Bank of China. But when he failed to repay the loan in July, China’s Exim Bank asked the Maldives government to repay $ 10 billion in August. This has happened because the Yameen government had also guaranteed loans taken by private companies.
