As covid-19 pandemic worsens a debt crisis in Africa, Chinese finance minister Liu Kun said on Friday that the China International Development Cooperation Agency and official bilateral leader Export-Import Bank of China had suspended debt service payments worth US$1.353 billion as part of the group of 20’s Debt Service Suspension Initiative (DSSI)on the eve of this weekend’s G20 summit.
China Development Bank (CDB) which China classes as a commercial creditor had on a ” voluntary basis and according to market principles, actively responded to DSSI”. Liu said.
By the end of September, CDB had signed an agreement with DSSI beneficiaries involving US$748 million although countries that benefited haven’t been disclosed.
The DSSI offers a temporary Suspension of government to government debt repayment to 73 developing countries to help them weather the impact of the coronavirus pandemic after April G20 finance ministers and central bank chiefs agreed to suspend debt service payments owed by the poorest countries and falling due from may 1,2020 to the end of the year to free up resources to fight covid-19.
The World Bank and the group of seven (G7) countries have also pushed for CDB to take part as an official bilateral leader for DSSI to be effective however China argued that since CDB lends on commercial instead of concessional terms, the bank should be treated as a commercial lender as it pushed for world Bank to be included in the DSSI, a move that has so far been resisted by another world Bank and IMF members.
We expect both sums to rise as China negotiates with the remaining two dozen or so countries that have been approved by the Paris club for DSSI debt relief.
China accounted for 70 percent or US$7.17 billion for the amount due from poor nations taking part in the G 20 debt plan and the amount is expected to increase to US$10.51 billion or 74 percent of the total according to world Bank.
Liu on Friday called on multilateral creditors like the World Bank to take part in the debt treatment process to help the poorest countries through this challenging time.
Some of the countries expected to benefit include Pakistan, Angola, Zambia, Ethiopia, Namibia, Mozambique, Tanzania, Dr. Congo, Uganda, Haiti, Nigeria, etc.
World Bank Group president David Malpass said countries were facing major debt challenges such as in Angola and Ethiopia where in the absence of permanent debt relief, the poverty outlook remains bleak while talking to G20 finance ministers and central bank governors meeting on Friday.
G20 summit is being hosted virtually by Saudi Arabia a country which is accused of human rights abuses and the main topic was about covid-19 pandemic, economy, and vaccine distribution.
China’s top Africa diplomat Wu Peng said that China will continue to help developing countries particularly in Africa ease debt burden through concrete actions and also keep working with the international community to deal with the debt issue.