The Maldives is in a near-financial crisis, similar to what Pakistan is going through, heightening the national debt. The new Maldivian President Ibrahim Mohamed Solih said the country was in a financial difficulty, thanks to former President Abdulla Yameen, after raking up debt with Chinese lenders in an infrastructure boom.
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After being sworn in as president, Solih said the state’s financial situation is precarious. “The damage was done due to projects conducted only for political reasons, and at a loss, are huge.” He said the state coffers have lost several billions of rufiyaa due to embezzlement and corruption conducted at different levels of the government.
Moreover, the projects have left the country of about 400,000 people in debt and prompted calls for investigations into how contracts were awarded to Chinese companies during the previous administration.
Mohammed Nasheed, the leader of the Maldivian Democratic Party said of the Maldives, who was in power as President of Maldives from 2008 – 2012 had accused Yameen’s government of allowing a Chinese ‘land grab of Maldivian islands and key infrastructure’, while China had dismissed the allegations as ‘absolute nonsense’. In March 2018, The Diplomat had raised the question about the island state’s ability to repay its debts.
Solih said the Maldives has run into a debt for projects such as mile-long sea bridge connecting the airport to Male, the airport expansion and massive housing projects on reclaimed islands. He also shared his fear of the debt amount being much higher than what it is predicted.
“Even a debt of $1.5 billion would be more than a quarter of the country’s annual gross domestic project.”