Chinese Ambassador to the Maldives Wang Lixin said on Thursday that China would not be restructuring the Maldives’ debt to the nation.

According to World Bank figures, the Maldives owes US$1.37 billion to China, including for sovereign guarantees, amounting to 20 percent of the Maldives’ external debt.

The country had received the green light to defer repayment over the next five years, or arrange for concessions where possible, President Mohamed Muizzu had said after his visit to China last January.

However, the Maldives Monetary Authority (MMA) said in March that it had no information that the loans owed to China had been restructured.

“If the debt is restructured, perhaps [Maldives] will not be able to borrow for new projects [in the future]… So, the technical staff [of both countries] are working to find a solution to this problem,” the Chinese ambassador said during a press conference held at the Chinese Embassy on Thursday .

According to Wang, the debt would be handled with due consideration as China does not want the Maldives’ debt to increase and as such China will look to prioritise grant aid projects to the Maldives.

The ambassador highlighted some of the projects currently being implemented in the Maldives through grant aid, such as:

  • Maintenance of Sinemalé Bridge
  • Project to strengthen laboratory facilities in hospitals
  • Technical assistance to identify issues affecting palm trees
  • 100-bed hospital project in Villimalé
  • Malé roads project

The ambassador said that while China has committed to several grant aid projects, the current focus should be on expanding the economy and increasing revenue through alternative means. The Maldives should be economically self-reliant and that can only be accomplished by diversifying with a view towards increasing income, she said.

Wang stated that relying solely on loans to achieve everything was not reasonable and that burdening future generations with massive debts should be avoided.

“But not everything can be done under grant aid. Therefore, I hope the Maldivian government receives due cooperation in the efforts to raise funds for new projects in other ways,” the ambassador was quoted as saying during the press conference.

The ambassador also addressed allegations that China is attempting to ensnare the Maldives, as well as other countries, in a debt trap, questioning whether the people of the Maldives actually believed such stories and whether any government would deliberately put the Maldives in such a position.

According to China’s top diplomat in the Maldives, China has always worked with the Maldives and all project decisions have been made by the Maldives.

“All the conditions of the projects are set by the Maldivian government,” Wang said.