Belt and Road: The debt threat
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Belt and Road: The debt threat

Countries are queueing to accept Chinese lending for Belt and Road infrastructure projects. But could that borrowing come back to bite them – and China?


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On April 12, IMF managing director Christine Lagarde ruffled feathers in Beijing by warning China not to laden Belt and Road recipient countries with unsustainable debt loads.

She was in Beijing to speak at a conference and, nominally, to announce the opening of the China-IMF Capacity Development Center, which aims to support the Belt and Road Initiative (BRI) by training Chinese development officials to work overseas.

But it was her warning on infrastructure spending – that “ventures can also lead to a problematic increase in debt, potentially limiting other spending as debt service rises, and creating balance of payments challenges” – that made the headlines.

The Center for Global Development has looked in detail at the debt burden issue, and Nomura included some of its findings in a new 90-page report released on April 17.

According to this analysis, eight countries are at risk of debt distress as a consequence of Belt and Road-related lending: Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, Montenegro, Pakistan and Tajikistan.

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