After building spree, just how much does the Maldives owe China?

MALE: One week after taking power, the new government of the Maldives says it has no idea how much it owes China, which has led a construction spree in the tiny Indian Ocean nation, but fears the debts run up in the past five years could be unsustainable.

Mohamed Nasheed, a former president now serving as advisor to new President Mohamed Ibrahim Solih, said that the Chinese ambassador to the Maldives, Zhang Lizhong, handed the government an invoice for US$ 3.2 billion – equivalent to around US$ 8,000 for every inhabitant of the archipelago.

China denies that, however, and says the number is closer to US$ 1.5 billion.

“It was an invoice. It just had a figure, US$ 3.2 billion. It was shocking,” said Nasheed.

“It wasn’t just a conversation, it was a written note handed over, it was clear, you owe us this much.” Nasheed said Zhang gave Solih the note at a meeting on Oct 6, days after his stunning election victory over former President Abdulla Yameen.

He did not give further details of exactly how the note was worded.

Asked about Nasheed’s comments, China’s Foreign Ministry said that its ambassador in the Maldives had rejected “this untruth” in statements to local media, referring to an interview with news website Avas in which Zhangwasquotedassayingreports of debt of around US$ 3 billion were “deeply exaggerated”.

China has underwritten millions of dollars in loans for infrastructure in the Maldives, located along its busy shipping route to the Middle East.

But the unprecedented building boom in the island chain of around 400,000 people – known for its white sand beaches and luminous cyan water – stoked fears it was loading up on debt and prompted a strident opposition campaign that helped Solih defeat Yameen in an election in September.

After taking office at the weekend, Solih’s administration has said the country’s finances are in worse shape than expected, and that it will take weeks or months to untangle details of all the deals struck with Chinese firms.

“We are at a loss to understand how much we really owe to China,” said Nasheed.

“Direct debt, or direct bilateral government-to-government debt is one thing, but there is on top of that sovereign guarantees for the private sector.

And there is also on top of that our state owned enterprises who have gone into debt.” Yameen could not be reached for comment.

But he said during the campaign that more work had occurred over the last few years than at any point in the past, and for that he had taken on debt.

“Years of development have come during a short period of four or five years. But if we didn’t take on debt as I said, and waited to do it with the income the Maldives earns this wouldn’t have been possible,” he said.

In the Avas interview, Zhang said the Maldives’ debt to China was US$ 600 million to construct a sea bridge linking the capital Male with the airport, expand the airport, and build residential tower blocks on land reclaimed from the sea. — Reuters