[Civsoc-mw] A different kind of debt crisis... don; t expect another HIPC

[cammack at mweb.co.za]

Don't expect debt relief, United States warns Africa

[Polity]

24th June 2019 

By:  <https://www.polity.org.za/author.php?u_id=99> Reuters 

African countries running up debt they won't be able to pay back, including
to  <https://www.polity.org.za/topic/china> China, should not expect to be
bailed out by western-sponsored debt relief, the
<https://www.polity.org.za/topic/united-states> United States' top
<https://www.polity.org.za/topic/africa> Africa diplomat warned.

The  <https://www.polity.org.za/topic/international-monetary-fund>
International Monetary Fund (IMF) and World Bank began the Heavily Indebted
Poor Countries (HIPC) Initiative in 1996 to help the world's poorest
countries clear billions of dollars worth of unsustainable debt.

But  <https://www.polity.org.za/topic/africa> Africa is facing another
potential debt crisis today, with around 40 percent of low-income countries
in the region now in debt distress or at high risk of it, according to an
IMF report released a year ago.

"We went through, just in the last 20 years, this big debt forgiveness for a
lot of African countries," said U.S. Assistant Secretary of State for
<https://www.polity.org.za/topic/africa> Africa for African Affairs Tibor
Nagy, referring to the HIPC programme.

"Now all of a sudden are we going to go through another cycle of that? ... I
certainly would not be sympathetic, and I don't think my administration
would be sympathetic to that kind of situation," he told reporters in
<https://www.polity.org.za/topic/pretoria> Pretoria,
<https://www.polity.org.za/topic/south-africa> South Africa, late on Sunday.

Under  <https://www.polity.org.za/topic/donald-trump> Donald Trump's
administration, the  <https://www.polity.org.za/topic/united-states> United
States has criticised  <https://www.polity.org.za/topic/china> China for
pushing poor countries into debt, mainly through lending for large-scale
<https://www.polity.org.za/topic/infrastructure> infrastructure
<https://www.polity.org.za/topic/projects> projects. It has warned those
nations risk losing control of strategic assets if they can't repay the
Chinese loans.

 <https://www.polity.org.za/topic/sri-lanka> Sri Lanka formally handed over
commercial activities in its main southern
<https://www.polity.org.za/topic/port> port in the town of
<https://www.polity.org.za/topic/hambantota> Hambantota to a Chinese company
in 2017 as part of a plan to convert $6-billion of loans that
<https://www.polity.org.za/topic/sri-lanka> Sri Lanka owes
<https://www.polity.org.za/topic/china> China into equity.

US officials have warned that a strategic
<https://www.polity.org.za/topic/port> port in the tiny Horn of
<https://www.polity.org.za/topic/africa> Africa nation of
<https://www.polity.org.za/topic/djibouti> Djibouti could be next, a
prospect the government there has denied.

>From 2000 to 2016,  <https://www.polity.org.za/topic/china> China loaned
around $125-billion to the continent, according to data from the
<https://www.polity.org.za/topic/china> China-
<https://www.polity.org.za/topic/africa> Africa Research Initiative at
<https://www.polity.org.za/topic/washington> Washington's Johns Hopkins
University School of Advanced International Studies.

And a number of African countries form part of
<https://www.polity.org.za/topic/china> China's $126-billion Belt and
<https://www.polity.org.za/topic/road> Road Initiative to link
<https://www.polity.org.za/topic/china> China by sea and land through an
<https://www.polity.org.za/topic/infrastructure> infrastructure network with
southeast and  <https://www.polity.org.za/topic/central-asia> central Asia,
the  <https://www.polity.org.za/topic/middle-east> Middle East,
<https://www.polity.org.za/topic/europe> Europe and
<https://www.polity.org.za/topic/africa> Africa.

 <https://www.polity.org.za/topic/china> China has rejected criticism of its
lending in  <https://www.polity.org.za/topic/africa> Africa. And debt
campaigners point to the fact that much of
<https://www.polity.org.za/topic/africa> Africa's current debt load consists
of commercial debt to western  <https://www.polity.org.za/topic/financial>
financial institutions or Eurobonds, which are more expensive to
<https://www.polity.org.za/topic/service> service than Chinese loans.

"All of these countries are sovereign states, so it's for them to decide who
they want to trade with," Nagy said. "We feel we have an obligation to point
out to them when we believe they are getting into severe economic
difficulties." 

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