African countries are calling on China to write off billions of dollars of debt due to the high cost of COVID-19 prevention.
Africa was recorded to be affected by the COVID-19 pandemic later than other regions of the world but the impact of other economies in the world has greatly affected the economy of the continent.
|A newly opened railway was built by China in Kenya.|
The plummeting oil price has made countries dependent on oil business such as Angola, Nigeria, the Republic of the Congo .. stand still. Affected tourism puts Seychelles and Mauritius at risk of economic recession.
In this situation, many African countries have called for bail in the form of “write off billions of dollars in debts”.
Angola, Zambia, Sudan and the Republic of Congo were among the first countries to speak out for debt relief. The reason given is to use the saved resources to reallocate budgets for health care, equipment for hospitals in the fight against corona virus.
On March 26, African nations called for a $ 100 billion bailout package that included a $ 44 billion debt relief bill from the top 20 largest economies, including China. The World Bank estimates that, in 2018, the total external debt of Africa will be $ 584.3 billion.
To date, the International Monetary Fund (IMF) has approved a six-month suspension of repayments of US $ 500 million for 25 countries, including 19 in Africa.
Meanwhile, China has not expressed its ability to write off debt to African countries and this is forecast to be unlikely.
Asked about how China will handle Africa’s debt relief proposal, the Chinese embassy in Nairobi mentioned a statement by Chinese Foreign Ministry spokeswoman Zhao Lianxun on Friday. / 4.
“China’s position, following the G20’s agreement on debt reduction, helps the poorest countries to focus their efforts to fight epidemics and support social and economic development,” said Zhao.
Policy advisers and Chinese banks told The Financial Times that Beijing is considering giving some answers, including postponing interest payments to some countries that have borrowed from China. Quoc. But it also issued a warning that expectations that China will completely erase its debts are impossible.
A researcher at the China Development Bank – China’s policy bank, along with the China Export-Import Bank – one of the financial institutions leading hundreds of billions of dollars in loans for projects BRI (the project is part of the Belt-Road Initiative) worldwide, saying: “We understand that there are many countries seeking to renegotiate loan terms.”
He said: “BRI loans are not foreign aid. We need a minimum return of principal and moderate interest. 20% of our portfolio projects had a problem. We had “We can consider extending loans and reducing interest rates. But in general, our loans follow market principles.”
A policy adviser to the Chinese government, which declined to provide identity, told the Financial Times that Beijing’s preferred option in addressing national requirements for debt relief would be to suspend payment. loan interest. Permanent debt write-off may only be Beijing’s last option.
Yun Sun, a member of the Africa Growth Initiative Group at Brookings Institution, Washington, said that it is difficult for China to unilaterally erase debt for Africa. Instead, Africa may be allowed to postpone loan repayments, debt restructuring, debt swaps or equity.
Meanwhile, East African economic expert Jibran Qureishi said that China can choose flexible ways to deal with African countries instead of writing off debt. He said that Africa still plays an important role with Beijing and they certainly will not want to reduce their influence in this area.
Data from the China-Africa Research Initiative at Johns Hopkins University’s School of International Studies in Washington shows that the country has given more than $ 143 billion to 49 African governments and state-owned companies from 2000 – 2017. London-based Campaign Debt Jubilee estimates that China is the creditor of about one fifth of all debt in Africa.
Through its “Belt and Road” initiative, China has invested and (Chinese companies) directly built a series of large-scale infrastructure projects in strategically located countries in South Asia. and Africa with billions of dollars in loans. Many countries have been unable to repay their debts due to the lack of benefits from Chinese infrastructure projects.
On April 22, a group of US Senators, including a critic of China like Mr. Ted Cruz, sent a letter to Secretary of State Mike Pompeo and Treasury Secretary Steven Mnuchin saying that more IMF support is needed. and the World Bank for economies damaged by COVID-19 instead of “letting US and other Western taxpayers” bail out Chinese financial institutions and create favorable conditions for debt-trap diplomacy. China.