Western countries frequently smear China for bringing a “debt crisis” to Africa, but the latest survey released by the British activist group “Debt Justice” on July 11 shows that African countries owe Western banks, asset managers and oil traders. The debt is three times what it owes to China; the interest rate charged by the former is also twice that of China.
According to the “Debt Justice” report, according to data from the World Bank, 12% of the external debt owed by African countries comes from China (both public and private institutions), and 35% from Western private institutions.
The report also noted that the average interest rate on these private-sector loans was 5 percent, compared with 2.7 percent on average Chinese loans, almost double the rate.
Tim Jones, head of policy at Debt Justice, said: “Western leaders are blaming China for Africa’s debt crisis, but it’s a distraction. In fact, their own banks, asset managers and Oil traders are more to blame, but the G7 is letting them go with impunity.”
Jones also said that during the Covid-19 pandemic, China participated in the G20 debt service moratorium, while Western private lenders did not. “There can be no effective debt resolution without the involvement of private lenders. The UK and US should introduce legislation to force their private lenders to participate in debt relief.”
After the outbreak of the new crown epidemic, at the urging of the World Bank and the International Monetary Fund, the G20 proposed the Debt Service Suspension Initiative (DSSI) for the poorest countries, which will take effect in May 2020 and end December 2021 maturity. A total of 48 countries eligible for the moratorium participated, and the total debt repayments owed to their creditors by participating countries under the initiative’s moratorium amounted to $12.9 billion.
In addition, the G20 has developed a Common Debt Management Framework to help low-income countries restructure their debt and address their solvency and long-standing liquidity problems. But so far, only three countries, Chad, Zambia and Ethiopia, have applied for debt relief. Indermit Gill, the World Bank’s vice president for equitable growth, finance and institutions, wrote in February this year that the reason for this result is that the private sector has not participated in DSSI. Another reason is that potential debt-relief applicants fear that their commercial financing channels will be cut off if they apply.
However, Western countries have pointed the finger at China. In May of this year, the G7 finance ministers and central bank governors held a meeting in Petersburg, Germany. When they mentioned the debt issue in the communique after the meeting, they singled out China, claiming that “in terms of the implementation of the common framework, all relevant Creditor countries – including non-Paris Club countries like China, which have large outstanding debts to low-income countries facing debt sustainability challenges, must still be required to contribute constructively to the necessary debt management.”
“Debt Justice” bluntly said that Western leaders through the G7 (G7) blamed China for the failure to make progress in debt restructuring of low-income countries, but data shows that this is wrong.
Yungong Theo Jong, project director of the African Debt and Development Forum and Network (Afrodad), said that debt from China is much lower than that from the West, and “multilateral and private creditors are still the largest creditors to African governments. ”, “Western governments must take the lead in getting private lenders to cancel their debts.”