Former President of the Maldives and current Speaker of the Parliament, Mohamed Nasheed has changed his tune regarding the Maldives’ relations with China.
Nasheed has always been openly critical of Maldives-China relationship, describing the many loans borrowed from China for development projects in the Maldives as debt traps. Nasheed has continuously warned that China may take over Maldives if the archipelago fails to repay due loans.
While Parliaments’ Whole House Committee has held extensive discussions regarding guarantees issued against loans, a draft report on the discussions has been prepared. The report has been approved by the committee, and was put up for vote during Tuesday's parliament sitting.
Speaking at the sitting, Nasheed said the amount the government has to pay as loans in the upcoming years is not proportional to the expected revenue. Under these circumstances, the only feasible solution is restructuring the loans, said Nasheed.
Nasheed added that the sale of bonds is intended to generate funds for loan repayment. He further pointed out that it is unwise to borrow more to repay current loans. In the case that the Maldives clearly states that it does not have the capacity to repay the loans, there are two possible actions that may be taken by commercial banks, said Nasheed. One would be to demand the return of assets, and seizing it. He does not believe China's commercial bank would take such a step, said Nasheed. It is not the way of the modern world, he further said.
Taking Barbados as an example , Nasheed said the country restructured its loans in 2018 in such a way that the value of their bonds declined. However, the country’s financial situation improved in a short while, and the trust of financial institutions also increased towards the country, said Nasheed.