China’s debt relief a meagre 1% of what Africa actually owes – Study says
China’s latest round of debt forgiveness, which will see it cancel interest-free loans to 17 African countries, will cover a tiny portion of its lending to the continent, according to a report from Boston University Global Development Policy Center.
Africa’s largest bilateral creditor announced the waivers at a meeting in August of the Forum on China-Africa Co-operation. It didn’t provide details on the value of the 23 interest-free loans that it said had matured at the end of 2021, nor did it state which nations owed the money.
The centre estimates the latest relief would amount to between $45m and $610m, or about 1% of what the continent owes China. It was difficult to determine an exact amount because of a lack of public information, it said.
Since 2000, Beijing has announced multiple rounds of debt forgiveness of interest-free loans to African countries, cancelling at least $3.4bn of debt through 2019, according to another study published by Johns Hopkins University School of Advanced International Studies.
It found that debt waivers were limited to mature, interest-free foreign aid loans, with the vast majority of China’s recent lending in Africa such as concessional and commercial loans not being considered for cancellation — although some of it has been restructured.
China accounts for almost 40% of the bilateral and private-creditor debt that the world’s poorest countries need to service this year, World Bank data show.
China’s Africa-debt forgiveness; re-channeling of $10bn IMF funds to Continent
China, some weeks ago, decided to forgive 17 African countries indebted to it.
China, according to reports by Bloomberg on Tuesday, August, 2022, is willing to forgive 23 interest-free loans to 17 African countries.
In addition, it is willing to redirect $10bn of its IMF reserves to the nations on the Continent.
The cancelation of debt by China was announced by Foreign Minister Wang Yi.
In announcing the debt cancelation, Foreign Minister Wang Yi didn’t provide details on the value of the loans which he said matured at the end of 2021 – but a recent study by the Boston University Global Development Policy Center has revealed that it is a fraction [1%] of what the continent owes the world’s superpower.
Ghana likely to benefit from China’s Africa-debt forgiveness
Meanwhile, Ghana could possibly benefit from China’s decision to forgive the 17 African countries indebted to it.
Although the 17 African countries have not been named, Ghana is expected to be among the list, as the country is believed to have high debt exposure to China.
Ghana has had a long-standing relationship with China with Ghana taking bilateral loans from China.
Currently, there is no official data indicating the quantum of loans Ghana owes China – this can be attributed to China’s preference to not disclose details of concessional loan agreements with it debtors.
With files from bloomberg
