IMF warns Maldives of looming debt distress as it seeks to borrow more from China

IMF warns Maldives of looming debt distress as it seeks to borrow more from China

WITHOUT naming any country, the IMF said that Maldives remains at high risk for external and overall debt distress as it seeks to avail more funding from its main creditor.

Home to white sandy beaches, secluded resorts, and world-famous marine life, Maldives highly depends on tourism as its crucial source of foreign exchange.

Its strategic location also serves as a key international shipping route connecting the East and the West while its mesmerizing beaches and turquoise waters have lured celebrity vacationers across the globe.

The island nation’s President Mohamed Muizzu forged closer ties with China since his election victory last year.

He has secured funding from. China since winning office, promised to build thousands of apartments, reclaim more land for urban development, and upgrade airports which are funded by the Chinese government.

The Indian Ocean archipelago received a warning from the International Monetary Fund to urgently raise revenue, cut spending, and reduce external borrowing to avoid a major economic crisis.

According to World Bank data, Maldives owes China $1.37 billion, which constitutes about 40% of the country’s public funds while the Export-Import Bank of China owned 25.2 percent of the South Asian nation’s external debt as of June 2023.

Despite criticisms hurled against Beijing, the President of Maldives proposed to revive the free trade agreement with the Chinese government.

He also thanked China for extending financial assistance used to develop the island and boost its tourism sector.

The warning comes as India provided the island nation $50 million in aid package and seeks to borrow more from China.


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