Speaker of the Parliament and former President Mohamed Nasheed says loans taken from India have been granted in a transparent manner and hence would not push the country into a debt trap.
Speaking at a news conference last night, the speaker had explained why loans given by the Indian government would not make the country fall into a debt trap whilst the loans given by the Chinese government has already pushed the country into a debt trap.
Nasheed explained that a debt trap opens up when the loan amount taken exceeds the assets owned by the country. He said such a trap is created when the country fails to generate enough economic activity that would cover the loan amount especially while using the loan.
Nasheed noted that the biggest difference between the Indian loans and Chinese loans was that the Indian loans were granted through a transparent manner in which the work of the tender board is also apparent.
His comments come after Finance Ministry confirmed that India has been the biggest lender to the Maldives amid the COVID-19 pandemic as the country struggles to keep its economy afloat.
Finance Ministry statistics showed that the Indian government had provided the biggest loan by offering financial assistance of USD 250 million by investing through the State Bank of India (Male') in the Government Domestic Treasury Bond as budget support.
Ruling MDP had been accusing that the loans given by the Chinese government to the previous administration have pushed the country into a debt trap that would hinder its economic growth.