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Sunday, 3 May 2020

China’s Belt and Road loans are coming under pressure amid pandemic squeeze

China’s Belt and Road loans are coming under pressure amid pandemic squeeze: Several countries are seeking debt relief from China on loans handed out by its banks under the Belt and Road Initiative (BRI) as the covid-19 pandemic is straining their economies, the Financial Times reports. Chinese lenders, including Exim Bank and China Development Bank, are considering suspending interest payments on the loans, while one policy adviser says certain borrowers could be allowed to reschedule their debts. Writing them off entirely, however, appears to be out of the question.

The debt relief requests appear to be concentrated in Africa, where lenders have doled out USD 461 bn in loans for BRI projects since 2013, according to figures from RWR Advisory. So far, Egypt is not among the countries that have requested debt relief from China. Cairo has borrowed some USD 15 bn from Chinese lenders through the initiative, including USD 3 bn for the new administrative capital’s central business district from a group of lenders led by state-owned Industrial and Commercial Bank of China. China has come under fire multiple times before for the initiative, which some countries have criticized as the “new version of colonialism” that has lured countries into debt traps. Loans to lower-income nations caused the IMF to rate in 2017 public debt as “unsustainable” or “at high risk of unsustainability” in 32 countries, compared to only 15 in 2013.

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