The world’s poorest nations will pay China and its lenders almost $14 billion this year in debt servicing costs, according to new research that urges Beijing to do more to support restructuring for those who need it.
In total, 68 such countries will pay $52.8 billion this year in debt costs, according to a report by the Green Finance & Development Center at Fudan University in Shanghai. More than a quarter of that will go to China, the report estimates, as Beijing is one of the largest lenders to developing nations.
At the end of 2020, the 68 nations collectively owed about $110 billion to various Chinese lenders in official bilateral debt, the report estimates, up from $105 billion in 2019. China was the largest single creditor after the World Bank’s International Development Association, the report says.
The repayment costs to official Chinese creditors will exceed 2% of gross national income in eight nations in 2022. Angola is worst off, owing almost 5% of its national income to China to pay interest and repay the principal of previous borrowings.
Given China is the main creditor to nations eligible for debt relief, it “has more responsibility and opportunities to provide bilateral and multilateral support for debt restructuring than other countries,” Yue Mengdi and Christoph Nedopil Wang wrote in the report released Monday.
While China has participated in debt relief, other international lenders need more transparency and clarity on the total size of Chinese lending, they said. In late 2020, China’s government said it had suspended debt servicing requirements on more than $2 billion in debt under an international effort to help poorer nations through the pandemic. But that initiative ended in December last year. In total, Chinese lenders suspended $5.7 billion in repayments, according to a report in late 2021 by the Jubilee Debt Campaign.
Bloomberg
