China Eximbank provides RMB 982.5 million government concessional loan for Phase 2 of the 1,500 Housing Units Development Project (Linked to Project ID#95441, 95443)

On September 2, 2012, the Export-Import Bank of China and the Government of Maldives signed an RMB 982,500,000 government concessional loan (GCL) agreement for Phase 2 of the 1,500 Housing Units Development Project. The GCL, which went into effect on November 11, 2012, carried a 19-year maturity (estimated final maturity date: November 11, 2031), an estimated grace period of 6.5 years, and an interest rate of 1.5%. The borrower was expected to use the proceeds of the loan to finance a commercial contract between the Ministry of Housing and Infrastructure of the Maldives and China Machinery Engineering Corporation (CMEC), which was signed on March 17, 2011 and amended on November 9, 2015. China Eximbank made disbursements worth MVR 722,137,500 in 2013, MVR 408,181,393 MVR in 2015, MVR 727,400,058 in 2016, and MVR 269,306,723 in 2017. The loan had achieved a 100% disbursement rate by December 31, 2019. The borrower made loan repayments to China Eximbank worth RMB 37,788,462 during the calendar year 2020. However, it made no loan repayments to China Eximbank during calendar year 2021. The loan’s amount outstanding was RMB 982,500,000 as of December 31, 2019, RMB 906,923,077 as of December 31, 2020, and RMB 831,346,154 as of December 31, 2021. The origins of the loan date back to 2011, when the then-President of the Maldives Mohamed Nasheed submitted to the Maldivian parliament a proposal to contract a China Eximbank loan for the construction of 1,500 housing units in four southern atolls. The project was intended to deal with housing shortages faced by young Maldivians. The 1500 housing unit locations were ultimately allocated across the following islands: Hulhumalé, Kaafu atoll – 704 housing units; Hithadhoo, Addu atoll – 264 housing units; Hulhumeedhoo, Addu atoll – 48 housing units; Fuvahmulah, Gnaviyani atoll – 200 housing units; Villingili, Gaafu Alif atoll – 52 housing units; Gahdhoo, Gaafu Dhaal atoll – 50 housing units; Thinadhoo, Gaafu Dhaal atoll – 120 housing units; Madaveli, Gaafu Dhaal atoll – 22 housing units; and Hoadehdhoo, Gaafu Dhaal atoll – 40 housing units. China Machinery Engineering Corporation (CMEC) was the contractor responsible for project implementation. Its work was overseen by the Ministry of Housing and Infrastructure of Maldives. The project broke ground on December 9, 2014, when the President of Maldives Abdulla Yameen Abdul Gayoom laid the foundation stone of the 704 housing units to be constructed in Hulhumalé. The project was officially completed and handed over to the local authorities on December 4, 2017. The project was originally expected to reach completion by April 2018. There are some indications that the China Eximbank loan for Phase 2 of the 1,500 Housing Units Development Project in Hulhumalé has financially underperformed vis-a-vis the original expectations of the lender. In May 2020, the China Eximbank government concessional loans for the 1,000 Unit Housing Development Project in Hulhumalé (captured via Project ID#34996), Phase 2 of the 1,500 Housing Units Development Project (captured via Project ID#35020), and the China-Maldives Friendship Bridge Construction Project (captured via Project ID#38037) were restructured through the G-20 Debt Service Suspension Initiative (DSSI). Debt service payments under the three loans were deferred until December 31, 2020 and the outstanding balances of the loans were transferred to a new China Eximbank loan instrument along with the capitalization of accrued interest. Debt service payments under the three loans were again deferred from January 1, 2021 to June 30, 2021 and the outstanding balances of the loans were again transferred to a second, new China Eximbank loan instrument along with the capitalization of accrued interest. Debt service payments were deferred yet again under the three loans from July 1, 2021 to December 31, 2021 and the outstanding balances of the loans was again transferred to a third, new China Eximbank loan instrument along with the capitalization of accrued interest. As of December 31, 2021, the amount outstanding under the first, new China Eximbank loan instrument was RMB 69,163,650. As of December 31, 2021, the amount outstanding under the second, new China Eximbank loan instrument was RMB 68,467,299. As of December 31, 2021, the amount outstanding under the third, new China Eximbank loan instrument was RMB 83,443,100.

Additional details

1. This project is also known as Phase 1 of the Housing Development Project, the Development of 1500 Housing Units in Hulhumalé Project, the Development of 1500 Housing Units Project. The Chinese project title is 援马住房二期项目 or CMEC马尔代夫二期1500套住房项目 or 马尔代夫二期1500套住房项目. 2. Several sources indicate that the government would have to pay RMB 17.74 million in annual interest during the grace period. 3. None of the primary, official sources identify the GCL’s interest rate. However, Finance Minister Ibrahim Ameer has publicly stated that loans from China Eximbank carry a grace period of 5 years. As such, for the time being, AidData assumes that the GCL for Phase 2 of the 1,500 Housing Units Development Project carries a grace period of 5 years. 4. In July 2014, the Parliament’s Public Accounts Committee voted to approve the changes to project’s scope of work such that it would involve the construction of 704 housing units in Hulhumalé. However, it is unclear if these changes were ultimately made in the underlying commercial contract with CMEC. 5. The amounts outstanding and repayments data are drawn from https://www.dropbox.com/s/iu1yr9owrnkuw6q/104._Statement_of_Public_Debt_Audit_Report_2021.pdf?dl=0 and https://www.dropbox.com/s/kmp9z6av86wf9ix/StatementOfPublicDebtFinancialYear2020.pdf?dl=0 6. The loan's interest rate (1.5%), maturity (19 years), and grace period (6.5 years) are drawn from the World Bank's Debtor Reporting System. See https://www.dropbox.com/s/ab8qt4n6jijcbhd/IDS_Average%20interest%20on%20new%20external%20debt%20commitments.xlsx?dl=0 and https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0

Number of official sources

28

Number of total sources

43