By the end of June, Zambia’s debt to Chinese creditors had exceeded $ 6 billion, according to data released by the government on October 7. Loans for infrastructure projects have made us dependent on China.
These figures were released by the recently elected new administration in Zambia after the China-Africa Studies Initiative (CARI) published the report (pdf) Last month, the country’s debt to Chinese creditors was estimated at $ 6.6 billion. The new number is about twice the amount revealed by the previous government.
Zambia’s exposure to Chinese creditors amounted to $ 14.67 billion, more than 40% of June’s total external debt, including public and non-guaranteed debt.
The Chinese Communist Party (CCP) is called for predatory lending practices and is said to aim to increase geopolitical influence by conquering countries with tight debt.
China is funding emerging market infrastructure projects by providing huge loans through state-owned banks. Many countries are unable to repay, fall into a “debt trap” and are forced to give China strategic assets in the long run, jeopardizing their sovereignty. Many, but not all, of these projects are under the China Belt and Road Initiative (BRI), a program launched in 2013 by Chinese leader Xi Jinping.
Zambia’s debt has “began to go out of control” since 2015, primarily with Chinese lending based on BRI. according to To the International Bar Association.
2019, financial services company Moody’s Natural resource-rich African countries, such as Zambia, have warned that in the event of default, they may have to hand over significant assets in renegotiation with Chinese creditors. report According to the International Bar Association. Zambia’s resources include copper, cobalt, silver, uranium, emeralds, coal, and other semi-precious stones and precious metals and minerals.
November 2020, Zambia Default Repayment of $ 42.5 million Eurobonds. This was the first time in Africa during a Chinese Communist virus pandemic, which deepened the financial burden.
Zambia’s Treasury has detailed the country’s $ 6.18 billion external debt to China. In June, the central government borrowed $ 4.47 billion from Chinese creditors, state-owned enterprises borrowed $ 1.34 billion through government-guaranteed facilities, and state-owned utility Zesco borrowed about $ 14 million not government-guaranteed. The remaining $ 225.5 million is overdue interest.
BRI’s unsustainable debt
According to a recent report, the Chinese administration’s funding of infrastructure projects in developing countries under the Belt and Road Initiative faces backlash from participating countries due to unsustainable debt and corruption scandals. study From AidData, the institute of William & Mary’s Global Institute..
According to a survey by AidData, 42 low- and middle-income countries have exposure to China of public debt of more than 10% of their gross domestic product (GDP).Similarly, the central bank report Twenty-three percent of the countries involved in the initiative said BRI debt has accumulated external debt to unsustainable levels.
According to Lawrence A. Franklin, projects offered by BRI and other Chinese lending programs are likely to boost a country’s GDP sufficient to pay its debt, but its economic benefits are primarily The article states that it is suspicious in Third World countries. Release According to Gatestone Institute.
“Some of these bilateral packages seem to have already been devised to imprison poor countries in the realm of permanent economic vassals to China,” says Franklin.
Reuters contributed to this article.