Debt diplomacy: $22 billion CAD burden on world's poorest nations
This year, the 75 poorest countries will need to repay $22 billion CAD in debt to the People's Republic of China. This stems from loans granted as part of the Belt and Road Initiative, according to a report released on Tuesday by the Australian think tank Lowy Institute.
The Belt and Road Initiative is a project through which China provides loans for infrastructure investments, such as building schools, bridges, and hospitals. Since 2016, China has become a leader in the bilateral loan market, with lending exceeding $67 billion CAD, surpassing the total value of loans provided by Western countries.
The Australian think tank Lowy Institute published a report revealing that the world's 75 poorest countries are expected to repay $22 billion CAD in debt to China this year. Most of these loans were provided under the Belt and Road Initiative, created by Chinese leader Xi Jinping.
According to the think tank, the total debt of 75 countries to China currently stands at $48 billion CAD. The authors of the report predict that by the end of the decade, Beijing will act more like a debt collector than a banker for developing countries.
Lack of transparency
The People's Republic of China continues to issue new loans, including to Honduras, Nicaragua, and the Solomon Islands, countries that have cut diplomatic ties with Taiwan and established relations with Beijing.
China also continues to finance some of its strategic partners, including Pakistan, Kazakhstan, Laos, and Mongolia. Among the borrowers are countries that extract key minerals and metals necessary for the production of batteries. These include Argentina, Brazil, and Indonesia.
The report emphasizes that China discloses very little data regarding the Belt and Road Initiative. The American institute AidData estimated in 2021 that 165 countries worldwide owe China at least $518 billion CAD.
