China's lending practices have significantly contributed to the Maldives' precarious financial situation, pushing the island nation toward a potential sovereign default. The Maldives owes China approximately $1.3 billion, which is a substantial portion of its external debt.

This debt burden has been exacerbated by China's strategic interests in the region, as part of its "string of pearls" strategy aimed at securing key locations in the Indian Ocean.

The China-Maldives Free Trade Agreement (FTA) has further intensified economic cooperation between the two countries, potentially leading to unsustainable debt levels for the Maldives.

The Maldives' financial woes have been compounded by its political shift toward China, straining relations with traditional partner India.

Despite efforts to manage its debt, including a recent agreement with China for a five-year deferment on loan repayments, the Maldives remains vulnerable to default.

Critics argue that China's lending practices amount to "debt-trap diplomacy," where recipient countries become increasingly beholden to Chinese strategic interests due to their inability to repay loans.

In response to its debt crisis, the Maldives has been exploring cost reduction measures and seeking financial restructuring. However, the long-term implications of these strategies remain uncertain, and the country's ability to avoid default hinges on its capacity to increase revenue and reduce expenses over the next few years.

Meanwhile, China continues to provide financial support, emphasizing its commitment to the Maldives' economic development while maintaining its strategic interests in the region.

ANI