China offers poor nations relief over $2.8b in debt

BEIJING • China has extended debt relief to developing countries worth a combined US$2.1 billion (S$2.8 billion) under the Group of 20 (G-20) framework, the highest among the group's members in terms of the amount deferred, Chinese Finance Minister Liu Kun said yesterday.

His comments come as African countries, hammered by the Covid-19 pandemic, face another debt crisis, and will need more long-term help than what the latest G-20 Debt Service Suspension Initiative offers them to ward off trouble ahead and keep much-needed investments coming in.

The China International Development Cooperation Agency, the country's aid agency, and the Export-Import Bank of China, the official bilateral creditors, have suspended debt service payments from 23 countries, worth a total of US$1.353 billion, Mr Liu said.

China Development Bank, as a commercial creditor, signed agreements with developing countries involving US$748 million by the end of September, he added.

That is tiny compared with the debt that developing countries owe China. The poorest nations' official bilateral debt to G-20 countries reached US$178 billion last year, with 63 per cent of the total owed to China, a World Bank study showed.

A third of the US$30.5 billion of public debt service payments due next year by sub-Saharan African nations which are eligible for the Debt Service Suspension Initiative is owed to official Chinese creditors. A further 10 per cent is linked to China Development Bank, said the Institute of International Finance.

The United States, China and other G-20 countries have offered poor countries - many of which are in Africa - relief until at least the middle of next year and will decide if another extension of six months is needed in April next year.

REUTERS

A version of this article appeared in the print edition of The Straits Times on November 21, 2020, with the headline 'China offers poor nations relief over $2.8b in debt'. Subscribe