China/the Maldives + China/Sri Lanka
Both the Maldives + Sri Lanka are struggling as commodity+currency crackdowns spotlight their depleting foreign reserves.
Re Sri Lanka, China has advanced $500m out of a $1.2bn syndicated loan pledged through the China Development Bank. The balance of the loan will now be forthcoming. But Sri Lanka is living on borrowed money and has been downgraded by Moodys Investors Service to Caa1 – “junk” status – and getting worse.
Re the Maldives, it, too, has been downgraded by Moodys from a “B” to “CCC. The World Bank highlighted the Maldives debt distress because loans from China exceeded the World Bank permitted limit. China cut $25m from the Maldives debt to bring the country within the World Bank limits.
China is making friends, not enemies, by its positive post Covid debt policy. The West talks only of China’s debt creation leading to China acquiring assets leading to China controlling the world. Actually China’s policy is quite different – the win-win approach. China benefits if the world prospers not if the world founders. More prosperity, more stability, more progress – that is how it works.
