India gives Maldives finance boost as Chinese debt leaves country’s coffers low

19 Dec 18

India will help the Maldives boost economic and social development through a $1.4bn support package, prime minister Narendra Modi has announced.

The money is to help the country, which is currently in financial difficulty because of debt owed to China.

President of the Maldives Mohammed Ibrahim Solih, who won a surprise election earlier this year, has asked officials to look into how much the country owes China after a building spree under the former administration.

It is believed the five-year construction boom, which included a Chinese-built sea bridge connecting the capital to the main airport – as well as the airport – could have left the Maldives in debt of up to more than $3bn.

Modi, at a press conference this week while his visiting counterpart from the Maldives, said: “For Maldives’ social and economic development we are providing a financial assistance of $1.4bn in the form of budgetary support, currency swap agreements and concessional lines of credit.”

Solih warned the state coffers were running low because of debt owed to China after winning the election in September.

Last month the Chinese foreign ministry said no developing country would fall into a ‘debt trap’ by working with Beijing.

Solih said at the press conference on Monday he and Modi had signed agreements to work together on trade, health and defence.

Earlier this month the US committed $10m as aid to the Maldives. Of this, $7m will be given in foreign military financial support and $3m to support civil society and help protect Maldives’ environment.

The government of Japan also agreed to grant just over $2.5m to the Maldives to help tackle the damage to the marine environment caused by oil spillage, at the start of December.

Did you enjoy this article?

Related articles

Have your say

CIPFA latest

Related jobs