Forbes magazine has placed the Maldives in the top five list of countries most in debt to China.
In an article published by Forbes, the Maldives was placed third in the list, with 38% of external debt to China as a percentage of Gross National Income (GNI) in 2020. A total of USD1.4 billion of the Maldives state debt is from loans taken from China. The Maldives has taken USD2.5 billion in loans from 2013 to 2018 and has taken another USD2.4 billion in loans in the past four years. As of June 2022, the state debt stands at USD6.5 billion and is estimated to increase to USD6.7 billion.
In the article, Forbes cited data from The World Bank which shows that countries heavily in debt to China are mostly located in Africa, but can also be found in Central Asia, Southeast Asia, and the Pacific. It stated that China is currently the preferred lender to the world’s low-income countries, which owe 37% of their debt to China in 2022, compared to just 24% in bilateral debt to the rest of the world.
Furthermore, Forbes stated that 30% of GNI or more in Chinese debt affects the Maldives and Laos, with the latter just having opened a railway line to China which is already causing debt issues for the country. It also stated that Chinese loans to developing nations have higher interest rates than bilateral loans from Paris Club countries or international institutions like the International Monetary Fund (IMF) or The World Bank and also have shorter repayment windows. Their setup is therefore closer to commercial loans concerning their conditions of repayment and confidentiality but also their objectives of funding very specific infrastructure projects instead of pursuing more generalised developmental goals.