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China has received a wave of requests for debt cancellations from countries affected by the economic crisis of the corona virus, including debts under the Belt and Road Initiative, a development program. possibly the largest in the world.
Chinese political advisers and banks told the newspaper The Financial Times That: Beijing is considering giving some answers, including the delay in paying interest to some countries that have already borrowed from China. But it also issued a warning that expectations that China will completely erase its debts are impossible.
A researcher with the China Development Bank, the China Policy Bank, along with the China Export-Import Bank, one of the financial institutions that leads hundreds of billions of dollars in project loans. BRI around the world said: “We understand that there are many countries seeking to renegotiate the terms of the loan.”
“However, it takes time to reach a new agreement for both parties and we cannot even go abroad at this time,” added the researcher. BRI loans are not foreign aid. We need to collect at least a reasonable amount of principal and interest. 20% of our portfolio projects were problematic. We may consider extending loans and lowering interest rates. But in general, our loans follow the principles of the market. “
BRI, launched in 2013 and seen as a typical foreign policy initiative by President Xi Jinping, aims to build infrastructure and enhance Chinese influence around the world. Of the 138 countries that have officially registered for BRI, many are developing countries, many of the weakest in the world.
RWR Advisory, a Washington-based consulting firm, estimates that the total amount of money that Chinese financial institutions have loaned to countries participating in the BRI project since 2013 has been $ 461 billion. . And with such a large loan, BRI is by far the largest development initiative in the world.
According to the Johns Hopkins School of Advanced International Studies, some countries requesting that Beijing cancel the debt are believed to be African countries, where Chinese governments, banks and contractors lend 143 billion from 2000 to 2017.
A Chinese government political adviser, who declined to provide identity, said Beijing’s preferred option to address national requirements for debt reduction would be to suspend payment of interest on the loan. . Permanent debt cancellation can only be Beijing’s last option.
The progress of implementation of BRI’s infrastructure projects faces a huge barrier due to the impact of the corona pandemic worldwide.
As the world economy plunges into recession, countries participating in the BRI project, especially in border markets, will find it difficult to incur new debt to finance new projects in the near future.
Thuy Dung
According to Financial times
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