The President’s Office (PO) has announced China will give the Maldives 50 million yuan (US$8.2 million) in grant aid “for the implementation of developmental projects and the advancement of public services.”
The announcement was made following a meeting between Foreign Minister Dunya Maumoon and President Abdulla Yameen with the Chinese Ambassador to the Maldives, Yu Hongyao.
The grant aid comes at a time the Maldives is facing dire economic circumstances, with the government unable to afford its huge recurrent expenditure on a bloated civil service and failing to pay millions of dollars owed to state-owned companies for services such as oil and electricity.
The State Trading Organisation (STO), the country’s main importer and wholesaler which brings in most of the Maldives’ basic commodities such as food and oil, warned of oil shortages in November after it was unable to pay a US$20 million debt to suppliers.
The central bank eventually bailed out the STO by drawing on the Maldives’ dwindling foreign currency reserves, but warned the country was on the verge of needing to print money, while state debt reached MVR 30 billion (US$1.9 billion).
The US$100 million fishing industry is about to be hit in 2014 by the decision of the country’s top export partner – Europe – refusing to extend the Maldives’ duty-free status due to its failure to ratify international conventions on freedom of religion and women’s rights.
The government this week said it would look to sell fish to the Arab and Malaysian markets by certifying Maldivian fish as ‘halal’.
The Maldives’ other major industry, tourism, meanwhile flat-lined in 2012 with the number of tourist bed nights falling 0.1 percent, even as annual arrivals continued to increase, this week topping one million.
The Tourism Ministry revealed that Chinese tourists now represented 30.8 percent of the total arrivals to the Maldives, the highest arrival from a single source market, however the Finance Ministry observed that this had not been matched with new revenue.
“As the most number of tourists to the country now come from China, we note that the low number of nights on average that a Chinese tourist spends in the Maldives has an adverse effect on the tourism sector’s GDP,” read the Finance Ministry’s ‘Fiscal and Economic Outlook: 2012 to 2016’ report.
The enthusiasm of the Maldives’ usual aid partners dwindled over two years of democratic uncertainty following President Mohamed Nasheed’s ousting by mutinying police in February 2012, while others – particularly Scandinavian countries lost interest once the Maldives graduated from ‘least developed’ to ‘middle income’ in 2011.
This was to some extent offset by extensive funding for climate change adaption and mitigation efforts across the country, ranging from waste management to desalination projects, that followed the Maldives’ grandstanding at international climate events.
President Yameen has pledged to tackle the Maldives’ economic woes by exploring and drilling for oil, as part of the Progressive Party of the Maldives (PPM) campaign pledges.