China Eximbank suspends debt service payments under multiple government concessional loans with the Government of the Maldives between May and December 2020 (Linked to Record ID#35020, 34996, 38037, 104813, 104814, 104815)

Project narrative

In response to the COVID-19 pandemic and the G20 Finance Ministers and Central Bank Governors meeting that took place on April 15, 2020 and on November 13, 2020, the Chinese Government agreed to work with other G20 members to implement the Debt Service Suspension Initiative (DSSI). As part of DSSI, China Eximbank and the Government of the Maldives signed a debt suspension agreement during calendar year 2021. Under the terms of the agreement, the lender agreed to suspend principal and interest payments due between May 1, 2020 and December 31, 2020 under multiple government concessional loan (GCL) agreements signed between 2010 and 2014: an RMB 455.6 million GCL for the China-Maldives Friendship Bridge Construction Project (captured via Record ID#38037), an RMB 982,500,000 GCL for Phase 2 of the 1,500 Housing Units Development Project (captured via Record ID#35020), and an RMB 481 million GCL for the 1,000 Unit Housing Development Project in Hulhumalé (captured via Record ID#34996). The total estimated suspension amount is RMB 69,163,650. These three debt service suspensions are captured via Record ID#104813, Record ID#104814, and Record ID#104815, respectively. At the time that the parties signed the debt suspension agreement, they both acknowledged that the total suspension amount would ultimately be determined at the end of the suspension period (since loan disbursements could be made during the suspension period and the lender agreed to suspend the payment of interest accrued on any disbursements during the suspension period). The lender and borrower agreed that the suspension of debt service would be undertaken on a net present value (NPV)-neutral basis. Therefore, the borrower agreed to pay interest accrued on the amount outstanding under the total suspension amount (‘Suspension Interest’) by paying the Suspension Interest on the amount outstanding under each loan agreement’s suspension amount at the same rate of interest set forth in the original loan agreement. Under the terms of the debt suspension agreement, the lender and the borrower also agreed that ‘[t]he suspension interest on the amount outstanding under the Suspension Amount concerning each Loan Agreement shall be calculated on the basis of the actual number of days elapsed and a year of 360 days, from and including the Repayment Date/Repayment Date of Principal and Interest falling within the Suspension Period to the date of payment in full of the corresponding Suspension Amount, and shall be paid in arrears on each Interest Payment Date under the corresponding Loan Agreement.’ The borrower also agreed that (1) ‘it shall continue to perform all its obligations […] under the Loan Agreements as supplemented and amended by [the debt suspension agreement]’; (2) ‘it shall use the created fiscal space to increase social, health, or economic spending in response to the COVID-19 crisis […]’ and ‘work closely with the International Financial Institutions who are expected to put in place a monitoring system’; (3) ‘it shall disclose to the Lender all Public Sector Financial Commitments (as defined in the Government Finance Statistics Manual 2014 (GFSM2014)), respecting commercially sensitive information’; and (4) ‘it shall contract no new non-concessional debt during the Suspension Period, other than agreements under the DSSI’. The amount outstanding under the new China Eximbank loan instrument was RMB 69,163,650 as of December 31, 2021 and RMB 46,109,100 as of December 31, 2022 (after the borrower made repayments worth RMB 23,054,550 in 2022).