US Not Ready To Release Debt Relief, Warns African Countries On Running Debt

The U.S. Assistant Secretary of State for Africa, Tibor Nagy, has warned African countries of running up debt they cannot pay back, including China, noting that they should not expect to be bailed out by western-sponsored debt relief.

The International Monetary Fund 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 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.

Nagy who was speaking in Pretoria, South Africa said,  “we went through this, just in the last 20 years, this big debt forgiveness for a lot of African countries,’’ referring to the HIPC programme.

“I certainly would not be sympathetic, and I do not think my administration would be sympathetic to that kind of situation,’’ he told reporters.

Donald Trump’s administration had criticized China for pushing poor countries into debt, mainly through lending for large-scale infrastructure projects.

Nagy warns that those nations risk losing control of strategic assets if they cannot repay the Chinese loans.

Already, Sri Lanka had to formally hand over commercial activities in its main southern port in the town of Hambantota to a Chinese company in 2017 as part of a plan to convert $6 billion of loans that Sri Lanka owes China into equity.

Recall that Sri Lanka is just recovering after Easter service bombing that killed hundreds Killed and many more wounded

U.S. officials warns that a strategic port in the tiny Horn of Africa nation of Djibouti could be next, a prospect the government there has denied.

From 2000 to 2016, China loaned around $125 billion to the continent, according to data from the China-Africa Research Initiative at Washington’s Johns Hopkins University School of Advanced International Studies.