Maldives Falls Into Chinese Debt Trap; Facing Debt Default Inks New Finance Pact With China

China and Maldives have signed a new agreement for more financial support from Beijing to the already debt-distressed island nation.

China has not revealed anything else about the agreement. Maldives is already facing a massive debt. It is barely managing to avoid default.

In a statement after the agreement, China’s foreign ministry said it has active communication with Maldives over its mounting debt to Beijing and is increasing its financial cooperation.

According to the World Bank, Maldives’ biggest lender is China and the debt it owes to Beijing has risen to above $1.3 billion. China has been in talks with Maldives to lend even more “support”.

Maldives’ debt crisis has come with the change in government. The new government in Maldives under President Mohamed Muizzu’s has increasingly been pro-China despite its rising debt to the nation. The island nation is moving away from its traditional partner, India and is becoming pro-China.

Experts have warned Maldives in recent weeks over doubts that it may not be able to pay back its debt to China.