By Spy Uganda
The People’s Republic of China has rubbished talks of forgiving African countries the debts they owe, just because of the economic hardships posed by the Coronavirus (COVID-19) pandemic.
According to
officials in Beijing, the best China can do is to delay demanding payment for
the debts, but not forgive or cancel them completely.
China, which is Africa’s largest bilateral creditor, is likely to agree to delay demands but not forgive its $152 billion of loans to Africa, an approach at odds with prior forbearance plans from groups including the Paris Club, according to a top Johns Hopkins University researcher.
“The Chinese
have always done their lending on the idea that individual projects contribute
to structural transformation and economic development,” said Deborah Brautigam,
who heads the China Africa Research Initiative at JHU’s School of Advanced
International Studies.
The thinking
is, “those projects might be good projects and viable projects to get countries
to a new stage where they might be in a position to repay the loans,” she said.
Brautigam’s
figures include loans made between 2000 and 2018. While many have been repaid
on schedule, it shows just how much China’s lending has grown in Africa amid a
push for political and economic clout through an overseas infrastructure
investment plan begun by President Xi Jinping in 2013.
China will
also provide $2 billion over two years to support the fight against the
pandemic, especially in developing countries, Xi said in a speech to the World
Health Assembly this week.
The good
news is that China is typically willing to negotiate payment extensions.
“Usually, it’s not that difficult to lengthen the payment period or lengthen
the maturity of loans,” Brautigam said. (https://www.thenaturalresult.com/)
China agreed
last May to restructure Republic of Congo debt as a prerequisite to a deal with
the International Monetary Fund deal. Under the terms, the Asian nation
deferred debt payments but refused to accept any reduction in principal.
At the time,
Chinese entities accounted for about 34% of Congo’s external debt. China holds
more than a quarter of external debt owed by nations that qualify for a
temporary Group of 20 debt suspension effort, according to the Institute for
International Finance in Washington.
China has
backed the G-20 plan, Brautigam said, although it hasn’t participated in previous
global debt relief initiatives. All told, according to IIF data, China’s
outstanding debt claims reached $5.5 trillion last year.
This comes
at a time when Private creditors representing more than $9 trillion of assets
under management have already formed a group to negotiate debt relief for
several African countries.
In the meantime,
Paris Club chair Odile Renaud-Basso said she’s confident that China will take
part in global debt negotiation efforts, although it may have to clarify the
scope of its loans, especially for African countries.
