Nepal, Maldives face critical junctures regarding debt burden

In recent developments, two South Asian nations, Nepal and the Maldives, are grappling with significant challenges related to foreign loans, raising concerns about economic stability and infrastructure viability.

In Nepal, Nepali Congress lawmaker Rajendra Bajgain has raised alarms in parliament regarding the financial burden of the Chinese loan for Pokhara International Airport. Despite Nepal’s commitment to repaying billions in loans, the airport remains underutilised, with international flights yet to commence. Bajgain has called for an immediate review, questioning the project’s viability and the rationale behind its financing. He also criticised the Government’s consideration of another Chinese loan for the Damak Corridor project, citing the financial strains from the airport loan as a cautionary tale.

Bajgain further highlighted design flaws in both Pokhara and Bhairahawa Airports, claiming they fail to meet international standards. These shortcomings contribute to Nepal’s continued presence on the European Union’s aviation safety blacklist, impeding the growth of the country’s aviation sector. Additionally, Bajgain criticised delays in addressing key issues, including the extension of halted flight operations at Tribhuvan International Airport due to taxiway expansion. He accused the Government of potentially diverting flights to underutilised airports, which he argues is unacceptable given unresolved safety concerns.

Meanwhile, the Maldives faces a mounting economic crisis, exacerbated by substantial debt to China. Under President Mohamed Muizzu, the Maldives’ debt is projected to reach US$ 8.3 billion by March 2024, representing 110% of its GDP. Of particular concern is the US$ 1.11 billion owed to China, accounting for nearly 15% of the GDP. This financial predicament threatens the Maldives’ economic sovereignty and political stability. In response, President Muizzu is seeking financial assistance from international partners, including a grant of US$ 200 million and a soft loan of US$ 350 million from China.

Additional support is being sought from Abu Dhabi, Saudi Arabia, and the UAE. Despite a US$ 10 million cash grant pledged by China, experts warn that such contributions are insufficient given the Maldives’ extensive financial needs.

Both Nepal and the Maldives face critical junctures requiring decisive action to address economic challenges, infrastructure issues, and ensure sustainable development. (page3news)

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