"China loans are not debt traps": Finance Minister

Finance Minister Ibrahim Ameer has said no loans borrowed from foreign parties put state assets at risk of mortgage. He made the statement while speaking at the Parliament's Public Finance Committee on Monday.

Western countries have repeatedly described loans borrowed from China as 'debt traps', a sentiment echoed by Maldives Parliament Speaker and former President of the Maldives Mohamed Nasheed. The Speaker has said that the Chinese government-financed development projects are also debt traps, and the government has not responded directly to the allegations.

However, in response to a question by Maradhoo MP Ibrahim Shareef in the Finance Committee on Monday, Minister Ameer said that no loan puts the state's assets at risk.

"In other countries across the world, there are relevant underlying assets as mortgages. But the loans are still unsecured loans; there is no underlying asset. There is no asset that can be seized even if loans default," he said.

"Other countries in the world have done that. In my time as Finance Minister since 2019, we have also received proposals to mortgage [assets] to receive USD 200 million. We reject these offers. We are taking loans based on economic health," he added.

"Whether it is China or any other country, we're looking at the cost of borrowing. It does not matter where [we are borrowing from], what country it is", the minister further said.

The Maldives borrowed most from China during President Abdulla Yameen Abdul Gayyoom's administration. Chinese banks provided loans for the development of Hiyaa flats and Velana International Airport.