Nasheed warns to renegotiate China loans if opposition wins pres polls

Self-exiled former president Mohamed Nasheed has again vowed to renegotiate loans taken from China if the opposition wins the presidential elections in September.

Incumbent president Abdulla Yameen Abdul Gayoom since taking office in 2013 has looked to China to realize his ambitious infrastructure development plans. Beijing has provided loans to fund several major infrastructure projects including a landmark bridge connecting the capital Male to the airport island Hulhule.

Concerns that Maldives would fall into a debt trap like Sri Lanka were further fueled after the island nation signed its first bilateral free trade agreement with China late last year.

Having earlier warned to review the FTA, Nasheed during an interview with Reuters alleged that China has dragged the Maldives into a debt trap and adding that any future government formed by the opposition will be unable to repay the loans unless a review cuts them to real value.

Total loans to build infrastructure, provided by China’s Exim bank, should be “easily more than USD2.5 billion,” Nasheed said, or roughly equivalent to the Indian Ocean archipelago’s gross domestic product (GDP).

“They have done this through creating a debt trap and then using debt as a disciplining agent,” he said in an interview in a suburb of the Sri Lankan capital, from where he is battling to defeat Yameen in the latter’s bid for re-election in September.

The government debt repayment to China alone in 2020 will be $750 million, about half of that year’s total revenue, he said.

“There is no way whatsoever we would be able to do that in 2020 and no one is going to give us the money,” Nasheed added.

“None of the Chinese projects have been tendered. We do not know the amount, we do not know the terms, we do not know who is taking it and we do not know the government’s obligation on it.”

He said, “We would have to renegotiate. It is a big cheat. We can’t agree to pay this amount. But we will pay the real amount.”

Nasheed lives in self imposed exile most recently in Sri Lanka after he was allowed to leave to the UK on medical leave in an internationally brokered deal following his jailing on terrorism charges.