US officials have criticised China, now the biggest government lender to the developing world, for failing to write off loans if borrowing countries such as Zambia run into trouble.
Lusaka – President Hakainde Hichilema has said that China and the US have a responsibility to set aside their differences and help countries such as Zambia get the debt relief needed to avoid further damage to the economy.
With finance officials from around the world gathering in Washington this week for the International Monetary Fund and World Bank biannual meetings, Mr. Hichilema’s country is emerging as a focal point of discussions on how to restructure poor nations’ debts.
US officials have criticised China, now the biggest government lender to the developing world, for failing to write off loans if borrowing countries such as Zambia run into trouble.
And Kate Marino, a business editor at Axios, yesterday wrote that during Covid-19, China agreed to a plan to help poor countries that could no longer repay their debts. Now, pressure is building on Beijing to keep its word.
“At this week’s big meetings of the International Monetary Fund and World Bank in Washington, analysts, investors and governments are looking for progress on stalled talks under the G20’s “Common Framework” – a relatively new roadmap for creditors to work out the debt defaults of a growing group of lower-income nations. The key holdout: China,” reads an excerpt from her article.
In June 2022, President Hichilema, according to a statement on his official Facebook page, said he discussed the importance of the two countries fostering better ties overall and specifically mentioned how to “resolve the debt issue.”
China has emerged as a top source of capital for low-income economies in recent years – a venture that’s helped expand its global influence. That now means China has a major role to play as debtor nations restructure – essentially it needs to agree to take some losses on loans that some of these countries are no longer able to repay.
Also Read: Why Zambia’s debt restructuring is a critical test for China.
So far, China has shown little indication it’s willing to accept such losses, leaving countries like Zambia, Ghana and Ethiopia – and millions of people – in economic limbo.
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