China rejects ‘exaggerated’ Maldives debt

China has moved to dismiss claims in recent reports that the debt amassed by the archipelago to the regional superpower amounts to over USD3 billion.

Beijing has provided grant and loans to fund several major infrastructure projects including a landmark bridge connecting the capital Male to the airport island Hulhule.

According to several media reports, Maldives' president-elect Ibrahim Mohamed Solih's transitional teams had discovered that the country owed the Chinese government not USD1.5 billion, as had been widely estimated, but nearly USD3 billion.

However, during an exclusive interview with ‘AVAS’, China ambassador to Maldives Zhang Lizhong rejected the figure as “deeply exaggerated”.

The ambassador had explained the exact details of the funds provided to the island nation and had referred to a meeting with Maldives governor which had been corroborated by the China government.

Ambassador Lizhong added, the figures on MMA website show Maldives’ total external debt up to now amounted to USD1.2 billion out of which USD600 million was to China.

“This USD600 million is part of preferential [sovereign] loans which were used to fund the bridge, airport expansion and some housing projects,” he explained adding that most of it had been issued with a mere two percent interest and five years grace period.

Ambassador Lizhong admitted that another USD900 million had been earmarked as commercial loans to some state owned companies to fund power projects to housing.

“But most of it has not even been issued yet as the projects are still ongoing,” he said adding that the loans would fund commercial projects with potential to generate future revenue.

‘Debt trap’ claims unsubstantiated

Several top figures of the new government including former president Mohamed Nasheed has continued to warn that Maldives could fall into a debt trap similar to neighbouring Sri Lanka.

However, Ambassador Lizhong insisted that such accusations were unsubstantiated and does not align with Chinese policy on bilateral cooperation.

“We have nothing to gain if a friendly country falls into debt. There is no single evidence to support so called debt trap claim. China has always looked to work with other countries for mutual benefit and equality.”

No ‘secret deal’ in development projects

Nasheed who has been critical of the growing China influence in archipelago had recently hinted that most of the projects had been overvalued adding that opposition government would pay back the country's debt to China but after "weighing" what is actually owed.

Ambassador Lizhong vehemently denied any ‘secret’ deals with the outgoing government insisting that the agreements were transparent and in accordance with international regulations and best practices.

He also said the Chinese side was ready to assist the new government to take a closer look at the agreements if it wished to do so.

“But the [new] government should understand that it has an obligation to repay these loans. We will continue to lend our help to assist the development of the Maldives,” he added.

According to the ambassador, he had met with the president elect and some of the coalition party leaders who had all assured that the new government would continue and honour existing agreements and projects.

“I would like to assure the Maldivian people that China does not attach any political condition to its assistance to Maldives or any country. Chinese policy for bilateral relations has always been sincere and is based on mutual cooperation and benefit.”