Maldives is working with China “practically” to discuss its approximately $1.4 billion debt, said Maldivian Foreign Minister Abdullah Shahid, indicating that the Solih government does not intend to cancel infrastructure projects or loans at present as the ruling party had promised ahead of elections last year. The comments came even as former Maldives President Mohammad Nasheed, who is the Speaker of the Assembly said that Maldives would not go ahead with the Free Trade Agreement signed by the previous government, and that it was necessary to “restructure the debt” with China.
Speaking to The Hindu , Mr. Shahid said that he had visited Beijing last month and said there was “goodwill in the Chinese leadership” to discuss the debt Maldives owed. “To be fair to China, it has been a generous donor. It has invested in housing and infrastructure projects. There has been irresponsible borrowing by the previous government and unfortunately we have to deal with it,” he said in an exclusive interview, while in Delhi for Joint Commission talks with External Affairs Minister S. Jaishankar as well as to attend the 11th Delhi Dialogue on “Advancing Partnerships in the Indo-Pacific.”
Mr. Nasheed, who is also the leader of the ruling MDP, made it clear that the FTA with China will “not go forward” as it has to be ratified in Parliament, and said the combined private and public loans totalled more than $3.5 billion, which must be restructured, warning that otherwise there will be a debt crisis in the Maldives by 2022 when the loans come due.
“If you are unable to restructure these projects or amend the course, I don’t see a soft landing for the Maldives at present. If you lack vision or a set of principles to take things forward, then what you do becomes unsustainable,” Mr. Nasheed told journalists in India, accusing China of “inflating project costs” to “debt trap” the Maldives, and compared it to the British East India company.
Both Mr. Nasheed, who led a parliamentary delegation to India and Mr. Shahid, met with Prime Minister Narendra Modi on Friday. In a statement released by the MEA, Mr. Shahid “expressed his deep appreciation for India’s support in various development cooperation initiatives that are currently being implemented in Maldives,” and stressed the commitment of the Maldives government to its ‘India First’ policy. After the joint commission meeting, India and the Maldives exchanged MoUs on cooperation between their Election commissions and Financial intelligence units, and the ratification of the extradition treaties agreed to earlier.