Maldives would not use the USD1.4 billion financial assistance offered by India to repay its debt to China, president Ibrahim Mohamed Solih said Wednesday.
Speaking during a press conference to brief the media on his state visit to neighbours India, president Solih said his government would look to utilize the funds offered by China to ease budgetary constraints rather than repay existing debt.
India financial package breakdown
- USD200 million - Budget support
- USD400 million - Currency swap
- USD800 million - Line of Credit
President Solih said his government aims to discuss with the Chinese government to offer some leeway into existing agreements.
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.
Despite initial estimates, the new government had later said that the debt owed to China amounted to USD1.4 billion which was confirmed by president Solih during Wednesday's press conference.
"We will talk with China into reducing interest rates and maybe extending repayment periods on those loans," he explained.
Solih also said he was still unaware of details of some of the agreements his predecessor had signed with China.
"I still haven't seen the big one. By the big one I mean the FTA [Free Trade Agreement] which was signed by president Yameen during his state visit to China," he said adding that his government was now trying to get details of all the pacts with China.
The contentious free trade agreement was signed after the official talks between the then Maldives president Abdulla Yameen Abdul Gayoom and his Chinese counterpart Xi Jinping during the former's first state visit to the global super power in 2017.
The Maldives' fast-tracking of the FTA with China has sparked concerns alleging that Sino-Maldivian trade balance remains considerably in favour of China, and there are concerns that the FTA will further increase the deficit and push Maldives towards a debt trap like Sri Lanka -- an issue that has alarmed Delhi amid apprehensions of neighbourhood plunging into economic crisis in future.
Despite the upswing in ties with India, president Solih moved to assure Beijing that its cordial and friendly relations with Maldives would remain.
