China agrees to consider restructuring of loans to Maldives: President Muizzu

Maldives President Mohamed Muizzu said on Saturday that China, largest external creditor to the country, has agreed to consider restructuring.

The repayment of loans taken by his country and the governments will initiate negotiations soon. He told the media in Male after his return from a five-day high-profile state visit to China that he has directly appealed to Chinese President Xi Jinping to restructure the loans provided to the Maldives.

He said that the loans were direct loans and that a technical team from China’s Finance Ministry will travel to Maldives soon “to research and decide the way to offer a grace period in loan repayments over next five years, Maldives news portal Sun online reported.

“This will allow us great easements in loan repayment,” he said. China is currently the Indian Ocean island nation’s largest external creditor, comprising about 20 per cent of its total public debt, according to data from the International Monetary Fund (IMF). Data shows that Maldives owes China about USD 1.3 billion or more.

The island country’s risk of external debt distress has been classified as “high” by the IMF, considering its total GDP is around USD 4.9 billion, according to recent data.

There were widespread concerns about Chinese loans as Sri Lanka and Pakistan, the biggest recipients of Chinese investments and loans, faced the worst economic crisis.

India bailed out Sri Lanka with about USD four billion in assistance after the island nation went bankrupt and different its external loan repayments in 2022.