Vulnerable countries to pay record $22bn this year, mostly relating to loans issued under Xi Jinping’s Belt and Road Initiative
The most vulnerable nations on Earth are facing a “tidal wave” of debt repayments as a Chinese lending boom starts to be called in, a new report has warned.
The analysis, published on Tuesday by Australian foreign policy thinktank the Lowy Institute, said that in 2025 the poorest 75 countries were on the hook for record high debt repayments US$22bn to China. The 75 nations’ debt formed the bulk of the total $35bn calculated by Lowy for 2025.
“Now, and for the rest of this decade, China will be more debt collector than banker to the developing world,” the report said.
The pressure to repay was putting strain on local funding for health and education as well as climate change mitigation.
Why would China want to force a country to evolve their economy in any way? China is in it for the assets they get. A perfect example is the Hambantota port in Sri Lanka. China lent their money to Sri Lanka, Sri Lanka spent it unwisely and China accepted a 99 year lease on the newly built port as partial debt repayment. The lease agreement said “no military use” and 3 years ago China docked a military survey ship at that port.
So tell me which is worse: a few years of austerity, or a 99 year loss of your largest and newest port to a foreign nation ?
That doesn’t seem uniquely terrible to me, as an American. That’s just kind of what empires do, and I doubt I’d have to go very far to find a dozen examples of the US doing something quite similar. And it’s not a few years of austerity, the austerity causes long-term disturbances in the well being of the population, and is sometimes never undone. The IMF are some of the biggest bastards on the planet, you’d almost be better off dealing with the devil.
Our discussion is between China lending and the IMF lending, not the USA.
Long term disturbances like losing your port nation’s seaport to China for 99 years? Also with the distance possibility it will be a Chinese military base on your own soil without your consent?
Also you’re mixing to concepts as equal when they aren’t. IMF austerity is an imposed condition for getting a loan. A country considering an IMF loan can choose to not take IMF money and therefore not impose austerity. China is doing worse here where they’re allowing bad loans with no conditions, but write into the agreements that China gets national assets when the country defaults. As in, the country doesn’t have a choice to forgo the Chinese money and keep their assets that ship (pun intended) has already sailed.
I’m not defending the IMF’s actions. They’re no angels. However it seems you’re answering you’d prefer to deal with China and lose your countries land and national assets.
Now hold on, so if someone agrees to the conditions of the loan for the IMF (austerity), that’s just business, but it isn’t if they agree to the conditions of the loan from China (99-year lease on a port on default)? Those both sound like Caveat Emptor to me, but only one of them is laser targeted on hurting the most disadvantaged in a country.
With the IMF terms, the negatives are all up-front. As in: you want this money, you will have to have this negative. The China deal is “take the money and spend it on whatever you want. Oh, you’re broke now and can’t pay us back? Well, we’re going to break your legs now for non-payment.”
The IMF loan would be the equivalent of having a bank loan with a high interest rate (meaning you have less money to spend on other things). The China deal is getting deferred payment on drugs from your drug dealer. He knows you’re not going to be able to pay him back and will extract the value of the drugs in some other worse way. Its predatory lending only apparent on the back end after the choice is removed from you.
Fair enough