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    Home»World»Maldives plunges into chinese debt trap; Sovereign Default Threat Looms Large |
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    Maldives plunges into chinese debt trap; Sovereign Default Threat Looms Large |

    The ChhattisgarhBy The ChhattisgarhMarch 13, 20254 Mins Read
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    Athens: The Maldives is Grappling with a Mounting Debt Crisis that Threets Its Economic Sovereignty, as Foreign Exchange Reserves Dwindle to Precaarious Levels While Sustantial Debt Repayments Lom. According to an article by human rights Advocate and Freelance Journalist Dimitra Staikou on Medium, China’s Lending Practices and Trade Policies Have Significly Acceptive Deterilation.

    “The scale of the debt problem is staggering. The Maldives’ Total Debt Stock Has Balloned from UsD 3 Billion in 2018 to UsD 8.2 Billion as of March 2024, with Projections Indicating a furdhe Billion by 2029. of the current debt, USD 3.4 billion is external, with China and India being the primary creditors, “Dimitra Wrote.

    The immediati Financial Challenge is Daunting, with the Maldives Needing to Service External Debt Worth UsD 600 Million in 2025 and a staggering usd 1 billion in 2026. Usable Foreign EXCHAN EXCCHAN EXCHAN EXCCHEN EXCHEN EXCHAN EXCHANCHECHE RELELEGE RELEGE Maldives Monetary Authority Stood at Below UsD 65 Million as of December 2024, an improvement from the alarming low of usd 21.97 million in July 2024. Mid-August, underscoring the severity of the balance of payments crisis.

    In Response, International Financial Institutions Have Downgraded The Country’s Credit Rating. Fittch lowered the maldives’ Rating by three notches in cultural cuts made in June and aug Issuer Rating.

    Dimitra highlighted that the China-Maldives Free Trade Agreement (FTA), implemented in January 2025, has worse the country’s economy’s economy’s vulnerabilites rather than providing relaffing. “Of the approximately USD 700 Million in Bilateral Trade, Maldives Exports Comprise Less Than 3 per cent compared to china’s dominating 97 per cent important share. Under the fta Per cent of goods from China, a concession that has yielded little reciprocal benefits given the country’s narrow expenses, “She Wrote.

    Within two months of the FTA’s implementation, Imports from China surgged to usd 65 million, up from usd 43 million during the same period the previous year. More Concerning is the Drastic Decline in Government Revenue from Import Duties, Which Fell by 64 UsD -From MVR 385 Million to Just MVR 138 Million.

    The agreement has also open the Maldivian Tourism Sector to Chinese Companies and Financial Institutions. While Chinese Tourists Contribute Significantly to Visitor Numbers, Financial Benefits Increasingly Flow Back to Chinese Companies Rather Than Strengthening The Maldivian economy. President Muizzu’s government has implemented numerous measures to address the crisis, including increasing the tourist GST TAX RAX RAX RAX RAX RAX RATE from 16 per cent to 17 per cent to 17 per cent Airport Development Fees. The government has also been also begun Divesting Stakes in State-Owned Enterprises and Approving Mergers of Key Companies, Including Maldives Airports Company Ltd. And Regional Airports Company Ltd.

    Aggressive Expenditure Control Measures have also also also been implemented, including the termination of 228 political appointees, Phasing Out Indirect Subsidies for FOOOL FOOK, Electricity, And Fuel, and Fuel, Fuel, and Fuel, and Priority Existing Public Sector Investment Programs. Despite these Comprehensive Efforts, Estimates Sugged The Maldives will face a Financing Gap of More Than UsD 500 Million in 2025 and UsD 800 Million in 2026.

    In response to the crisis, the maldives have sought Financial Assistant from Multiple Sources. The government has Requested UsD 300 Million from Each of the Gulf Cooperation Council (GCC) Countries, but these requests have brought largest Gone unheeded. Similarly, President Muizzu’s appeals to China for UsD 200 Million in Budget Support from the China Development Bank, Refinancing of Debt Service Payments, and A Currency SWAP HAVE RECEVED HOW POSTIVED Response.

    A USD 750 Million currency swap from India has provided some temporary relieve for routine important payments and government experts. However, this measure is insufficient to cover upcoming debt service payments, Including the USD 1 billion Sukuk Repayment due in 2026. DIMITRA WARNED THATE THATER NEED THE THEAN MIRORS ATHERN SEEN CHEAN CHEAN CHEAN CHEAN CHEAN CHEAN NATE Where Chinese Loans and Trade Agreements Have LED to Unsustainable Debt Burdens.

    “Without Significant International International or Debt Restructuring, The Maldives Risks Following Neighboring Sri Lanka Into Sovereign Default,” She Wrote. With Creditors Showing Little Willingness to Offer Assistance, The Maldives Faces An Economic Crisis that would have-Reaching implications for its Financial Independence and Political Sovereignty. This Direction Financial Situation Compounds the existent threat the low-loying island nation alredy fares from from Climate Change.

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