Business & Tourism
Concern over Maldives mounting debt to China
The three largest Chinese projects in the Maldives are said to be worth $1.5 billion.
Concern and disapproval flooded social media and the comment sections of local news websites after reports of China’s proposal to take over Zambia’s international airport if the country fails to pay back its foreign debt.
China’s Exim bank gave a US$360 million loan for the three-year development of Kenneth Kaunda international airport in 2015 and Zambia’s debt levels have been described as a “national crisis.”
“Zambia, Gambia, all lessons to you!” former foreign minister Ahmed Shaheed tweeted, referring to China-backed development projects in the Maldives such as the US$200 million Sinamalé Bridge and an upgrade of the country’s main international airport.
Financed with grant aid and loans from China and built by a Chinese company, the country’s first overwater bridge connects the capital via the airport island Hulhulé to its suburb Hulhumalé, a reclaimed island under development as a new urban centre.
MP Abdul Ghafoor Moosa, who sits on parliament’s finance committee, told the Maldives Independent that about 90 percent of the country’s external debt has to be paid to China.
“Our economy will be in a deadlock because of China. We will have to pay at least 70 percent of what we get to China. It is an immense economic fear to be so dependent on just one country alone,” the MP for Kulhudhuffushi said.
Most comments on local news websites expressed concern and skepticism over China-led projects in the Maldives, while a smaller number showed confidence in President Abdulla Yameen’s ability as an economist.
“The same thing happened to Sri Lanka. Maldives is also going to face this,” said one person. Another wrote: “The next thing we hear will be China’s takeover of Velana Airport and Sinamalé bridge.”
But one person claimed only Yameen could handle Chinese debt.
“He is a leader who can pay back loans. A leader who knows how to do business. Zambia would not face this if they had President Yameen to lead them.”
“Did China ever ask these countries to take loans when they did not have the capability to pay it back?” another person wrote. “There will always be penalties if a country is unable to pay back debt after taking loans for development projects. Even if the loan is taken from India.”
– ‘Disturbing pattern’ –
MP Ahmed Amir from the Maldives Development Alliance, a political party in the ruling coalition, said he was unfamiliar with matters relating to economy and finance — despite being the deputy chair of parliament’s finance committee.
“All I can say is, I don’t want us to face any losses. I want us to gain. And I am very concerned over the things being done by entities within the country to block financial opportunities to the Maldives,” he said, adding that the finance committee’s chair would be able to elaborate.
Ruling party lawmaker MP Ahmed Nihan, who chairs the committee, was not responding to calls when contacted by the Maldives Independent.
An editorial from the Financial Times on Monday said US officials were seeing “a disturbing pattern in which Beijing has encouraged indebtedness in order to gain control of strategic assets when debtors default on repayments.”
According to the Maldives central bank’s annual report for 2017 the country’s debt to GDP ratio increased to 26 percent of the GDP in 2017, a 20 percent bump from the previous year.
The total external debt stock “increased by USD339.4 million and summed to USD 1.2 billion” at the end of 2017, the MMA report stated, as governor Ahmed Naseer said the country must manage external debt taken to fund development projects.
The IMF and the World Bank predict Maldivian debt to reach 121 percent of GDP by 2020.
Photo of Sinamalé Bridge opening ceremony from presidency.gov.mv