China in the driver's seat amid calls for Africa debt relief via JoeBavier chenglengtr andrea_shalal Follow the latest news on the coronavirus with our live blog:
JOHANNESBURG/BEIJING/WASHINGTON - Support is growing for debt relief to help the world’s poorest, indebted nations - most of them in Africa - confront the economic havoc wreaked by COVID-19. But there is one big question mark: China.
Beijing is likely to endorse a temporary freeze on debt payments by African countries as part of an expected agreement by the Group of 20 major economies this week, two sources familiar with the process told Reuters. “China is still a rising power, and it is only a recent ... entrant as a major financial partner in Africa,” said Yunnan Chen of the Overseas Development Institute , a London think tank.
Nonetheless African countries have taken a disproportionate hit due to plummeting oil and commodity prices and weaker currencies, which ramp up external debt servicing costs.As an immediate step, the IMF and World Bank are pushing for a payment moratorium on bilateral debt owed by the world’s poorest countries.
The ODI estimates lending from China makes up 33% of external debt service in Kenya, 17% in Ethiopia and 10% in Nigeria. Beijing has a history of working with struggling borrowers, but the process often aims to ease short-term pressure to ensure eventual repayment.
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