The Maldives has been advised by the International Monetary Fund (IMF) of a “high risk of external and overall debt distress.” However, the largest creditor, China, has said it is holding talks with Male on providing some relief in debt repayment on the loans it took from Beijing.
Despite this, Wang Lixin, who is Chinese ambassador to the Maldives, stated that this would hinder further financial assistance from China to the Maldives. Instead of having a debt restructuring process so as to obtain more funding from Beijing Wang said in Edition.mv news portal last week.According to Sun.mv portal, she also disclosed that a joint team of Chinese and Maldivian professionals were handling the issue.
In nominal terms, according to an IMF report released on May 13th, Maldives’ external public and publicly guaranteed (PPG) debt which is largely due to bilateral and commercial lenders increased from $3.046 million to $3.072 million in 2022.The largest creditor for the Maldives is China with 19%(external) PPG debt.
Accordingly, China will prioritize grants and free aid because she does not want her national debts increase any further. Interestingly enough, India had only recently extended budgetary support to Maldive’s government ($50m treasury bill rollover for one year after a special request).
