Maldives seeks to restructure China debt

7 December, 2019 12:00 AM printer

COLOMBO: The Maldives is seeking a “diplomatic” solution to restructure its Chinese debt as the small but strategically located atoll nation struggles with repayments, the foreign ministry has said, reports AFP.   

Former strongman president Abdulla Yameen relied heavily on Beijing to provide financial support during his five year term and his successor’s party has accused China of a land grab in the country.

Foreign minister Abdulla Shahid told reporters on Thursday that China was a generous donor, but the previous Maldivian government borrowed heavily without adequate provisioning for repayments.

Speaking in Sri Lanka’s capital Colombo he said the direct loans as well as government guarantees to state-owned enterprises on their loans from China amount to a debt of some $1.4 billion.

This is a large burden he said for the nation of 340,000 Sunni Muslims.

“Borrowings by the previous government (of president Abdulla Yameen) were unreasonable and put us in difficulty,” Shahid said. “But, we can solve this mess through diplomatic means.”

The pro-Beijing Yameen was jailed last month for five years and fined $5 million for corruption during his term that ended late last year.

“We could have a debt restructuring in the future. I am in contact with the Chinese government and I am confident that we can reach a diplomatic understanding.” Shahid is visiting Sri Lanka for talks with Sri Lanka’s new leaders — President Gotabaya Rajapaksa and his Prime Minister brother Mahinda — who had also borrowed heavily from China during their previous term in office between 2005 and 2015.

The former Sri Lankan government handed over control of the Hambantota port in the south of the island to a Chinese company on a 99-year lease in December 2017.