22 November 2018
IMF faces China debt dilemma as low income nations seek help
The trouble is, no one has the information needed to answer this question — and so ensure that Beijing plays its part in any writedowns of debt to official creditors.
In the past decade, China has stepped into the gap left by western donors, offering no-strings finance for political allies and for projects advancing its commercial and geopolitical interests.
In the absence of official data, it is hard to assess even the scale of lending. Researchers at Johns Hopkins University — who say their task is “more akin . . . to detective work than accounting” — estimate that the Chinese government, banks and contractors loaned some $143bn to African governments and state-owned enterprises between 2000 and 2017. Information on the maturity, cost and terms of loans is next to non-existent.
This is a huge challenge for the IMF. “Assessing debt sustainability is at the heart of IMF competence. If you get it wrong or go about it without the information, it hurts your credibility,” said a former senior official at the fund.
The first big test of the IMF’s resolve to tackle the issue is Pakistan’s bailout request: talks will resume in January, after a staff visit this week ended without agreement.