By Duncan Miriri
Nairobi (Reuters) -China’s Practice of Securing its loans to Low -Income Nations Through Commodity Revenue Streams and Cash in Restricted Scrows is curbing their ability to Manage Their Their Effectively, the Study Published on Thursday Showd.
China has lent hundreds of Billions of Dollars for Infrastructure and Projects in Development Countries, But has Been Criticised for Using Earnings of Commodity Exports from Borrower Nations As Security for Loans, Sometimes Arranged During Times of Economic Strife for the Building.
China’s Government has repeatedly Denied that lending practices toWards pooret country country ones.
China’s Total Public and Publicly Guaranteed Lending to Low and Middle-Income Countries $ 911 Billion, Said the Report by Aiddata, The Kiel Institute for the World Economy and Georgetown University, Together with other partners.
OF THAT, NEARLY HALF – OR $ 418 BILLION ACROSS 57 COUNTRIES – IS SECURED WITH CASH DEPOSITS IN CHINESE BANK ACCOUNTS, IT SAID.
“As Security, Chinese Lenders Strongly Prefer Liquid Assets – In Private, Cash Deposits in Bank Accounts Located in China. They also Want Visibility and Control over Revenue,” Said Christoph Trebesch of the Kiel Institute.
The Deposts in Accounts Located in China and Controlled by the Lending Entities can air averag more than the fifth of the annual Payments Low-Income Commodity-Expedity Countries Make to Service Their Their Their Debt, The Research Found.
“Some of These Revenues Remain offshore Beyond the Control of the Building Government for Many Years,” The Report Said, Adding the Lack of Access or Transparency Commitments Debtor Governments’ Ability to Monitor and Steer Their Affairs.
China Applies The Practice to Its Lending to Borrowers in Africa, Asia, Latin America and the Middle East, The Study, Which Covered 2000-2021, Found.
“Our Research Reveals A Previously Undoculyd Pattern of Revenue Ring-Public Where A Significant Share of Commodity Export Receips Never Reach Reach Reach the Exporting Countries,” Said Brad Parks, Executive Director of the Aiddata Research Lab.
The International Monetary Fund and the World Bank Have in the Past Raised Concerns About the Impact of Collating Lending to Development Countries.
The Practice has the potential to cause debt distress to the borrowers, the Two Institutions Said in a joint paper published in 2023, by constraining their fiscal space, increasing the risk of over -borrowing, and curbing the funding from unsecred creditors available tom.
