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The new president of the Maldives warns the sovereign debt “plundered” after China-led boom

MALE (Reuters) – The new president of the Maldives took his chairman on Saturday and explained that government debt had…

MALE (Reuters) – The new president of the Maldives took his chairman on Saturday and explained that government debt had been robbed and warned that the country was in financial difficulties after raising the debt of Chinese lenders in an infrastructure boom.

Maldives elected president Ibrahim Mohamed Solih (L) takes you out of chief judge Dr. Ahmed Abdulla Didi (R) during the Swearing ceremony in Male, Maldives, November 1

7, 2018. REUTERS / Ashwa Faheem

Maldives, famous for their luxury hotels on palm-front islands, is the latest in a number of small countries where China has invested millions of dollars of construction roads and housing as part of its Belt and Road Initiative.

However, these projects have left the country with more than 400,000 people in debt and called for investigations about how contracts were awarded to Chinese companies during the previous administration.

“When I take over the presidency, the state’s financial situation is uncertain. The damage caused by projects carried out solely for political reasons and in loss is huge,” said Ibrahim Mohamed Solih in a speech shortly after he was sworn in as president.

Prime Minister Narendra Modi in India, trying to complain in a country that it considered as part of its area of ​​influence, was the highest rated foreign visitor at the ceremony of a football stadium in the capital, Male.

Solih, a veteran legislature, won the presidential election in September as a joint opposition candidate against President Abdullah Yameen, a strongman who ruled the country closer to China and faced international pressure over imprisoned political rivals.

“The treasury bills have lost several billion rufiyaa (local currency) because of embezzlement and corruption carried out at different levels of government,” said Solih.

He said it was not clear how much the state had lost. His transitional team said this week that it would conduct a forensic examination of the agreements sealed by the Yameen Administration, many of them with Chinese state-owned companies.

The great concern for Solih’s team is the debt it has incurred with Chinese lenders for projects such as a mile long sea bridge that connects the airport to the capital, airport expansion and massive housing projects on restored islands.

Solih’s transitional team said it had been said that the country owed $ 1.5 billion to Chinese lenders, but fear that it could be much higher. Also a $ 1.5 billion debt would be more than a quarter of the country’s annual gross domestic product.

Modi told Solih that India was ready to help the Maldives through its financial difficulties, the Indian Ministry of Foreign Affairs said in a statement after its meeting.

India, as long as the main political and economic partner of the Maldives, had been concerned that China’s expansive diplomacy was aimed at establishing an outpost on the islands.

China has already gained a strong foothold in Sri Lanka, just off the south coast of India, where it has built a port and now controls it in a debt-by-share exchange.

Modi and Solih agreed that the two countries would think about each other’s concerns and the need for stability in the Indian Ocean, the Indian Ministry of Foreign Affairs said in the statement.

China has said it hoped there would be continuity in politics during the Solih presidency and that would create good conditions for Chinese companies.

Further Reporting by Mohamed Junayd, Editing Louise Heavens

Our Standards: Thomson Reuters Trust Principles.

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