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China-Africa relations: IMF report says Chinese loans are not main debt burden in sub-Saharan region

  • Beijing the largest bilateral official lender to countries in Africa but share in sub-Saharan overall sovereign debt still relatively small, according to report
  • IMF is distancing itself from US ‘debt trap diplomacy’ theory along with new American narrative China’s economy is on brink of collapse, says analyst

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China’s share of sub-Saharan Africa external public debt rose to about 17 per cent – or US$134 billion – in 2021, according to the IMF. Photo: Reuters
China’s lending to Africa may have grown rapidly in the past two decades but Beijing is not the main cause of debt distress in sub-Saharan Africa, the Washington-based International Monetary Fund (IMF) said in its Regional Economic Outlook for Africa report.

China’s share of the total sub-Saharan Africa external public debt rose from less than 2 per cent before 2005 to about 17 per cent – or US$134 billion – in 2021, according to the IMF. The World Bank’s International Debt Report said sub-Saharan Africa’s total external debt stood at US$790 billion in 2021, a figure that more than doubled in about a decade.

Through the Belt and Road Initiative, China provided African countries with a new source of infrastructure financing that funded mega projects, such as ports, railways, power dams, highways and bridges. Beijing was now the largest bilateral official lender to countries in the continent, the fund said.

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But China’s share in sub-Saharan Africa’s overall sovereign debt, or public debt, was still relatively small – about 6 per cent of the total – the IMF said.

“It is noteworthy that the debt owed to China has not been the principal contributor to the region’s public debt surge in the past 15 years,” the IMF said in a side report about sub-Saharan Africa’s economic relations with China that it released early this month.

Some 60.9 per cent of the region’s public debt is now domestic commercial borrowing with higher interest rates and shorter maturity, while multilateral lenders hold 13.7 per cent of the debt.

Saying China is not the main problem in sub-Saharan Africa’s debt overhang may debunk criticism from the West that lending by Beijing has driven up debt to unsustainable levels for a number of nations in Africa. Critics, especially the US, accuse Beijing of engaging in “debt trap diplomacy”, leaving countries saddled with loans they cannot afford.

China has denied the debt trap allegations. Instead, it has pointed the finger at multilateral financial institutions and commercial creditors which account for more than 80 per cent of sovereign debt for developing countries.

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