Chinese Debt Casts Dark Shadow Over Maldives’ Economy

Chinese debt trap has cast a shadow over Maldivian economy with some estimates suggesting that island nation maybe owing huge amount to Beijing.

China has faced criticism for its infrastructure projects in the developing countries, which are disguised as debt traps intended to increase Chinese footprints in the region.

According to a BBC report, a 2.1 km (1.3-mile), four-lane bridge was built with USD 200m (PS148m) from Beijing. The Sinamale bridge or China-Maldives Friendship Bridge, the first built between any islands in the Maldivian archipelago, has also led to a boom in new property and commercial developments on the island of Hulumale, the report said.

It was one of the several projects undertaken during the tenure of Maldives’ pro-China President Abdullah Yameen, who was elected in 2013. As per the report, Yameen’s tenure was also marked by allegations of human rights abuses with many politicians including former President Mohamed Nasheed, who is now Speaker, getting detained.

Yameen suffered a surprise defeat in the election in 2018 and Ibrahim Mohammed Solih became President.

“The [Chinese debt] bill was USD 3.1bn,” Nasheed was quoted as saying. As per the report, the figure included government-to-government loans, money given to state enterprises and private sector loans guaranteed by the Maldivian government. The Speaker of Maldvies’ Parliament is worried his country walked into a debt trap.

“Can these assets produce enough revenue to pay back the debt? The business plan of none of these projects has any indication to suggest that it will be able to pay back the loan.”

However, former Maldivian officials and Chinese representatives put the figure Male owes China between USD 1.1 to 1.4 billion, a huge sum for a country with GDP of around USD 4.9 billion.

Nasheed worries Maldives could meet same fate as Sri Lanka where Chinese debt trap led to a Chinese state-run enterprise acquired a 70 per cent stake in the Hambantota port on a 99-year lease in 2017.

Maldvies, which is heavily reliant on tourism has been hit hard by coronavirus. According to the report, the foreign tourist arrivals were down 55 per cent by the end of June and estimates suggest the country may lose more than USD 700m, more than a third of its tourism income, this year if the pandemic persists. (ANI)