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China's loans to countries threaten emerging markets

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China's loans to countries threaten emerging markets

Economy | 02:32 - 02/05/2020

 
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Follow-up - Mawazine News

The crisis that the world is going through due to the spread of the Corona virus has depleted the reserves of the less wealthy countries, leaving them unable to commit to paying their external debts.
Although the G20 countries pledged to reschedule the debt to help overcome the difficult situation in the global economy, China seemed to tweet out the swarm.
In their report published by the American "Foreign Affairs" magazine, the writers Ben Steele and Benjamin Dela Rocca said that the new Corona virus has caused the engine of the global economy to stop completely. Global growth is expected to drop from 2.9% last year to a negative growth rate in 2020, which has not happened since World War II until 2009. 
It is clear - according to the report - that the process of recovering the global economy will be slow and painful, as government restrictions to prevent the virus from reappearing will hinder the resumption of the production and consumption chain as required, as well as causing many borrowers to default on loans and bankrupt some Corporations, and layoffs will lead to growing unemployment.
The authors stressed that the consequences of the global economic recession will not affect all countries of the world to the same degree, because poor countries suffer from poor health infrastructure, which hinders their efforts to stop the outbreak of the Corona virus, and that individuals suffer from accumulated debts even before the outbreak of the virus, which imposed on them financial burdens Additional.
 Capital withdrawal
Foreign investors are now withdrawing their capital from emerging markets and returning them to richer countries, in search of a safe haven. As a result, countries such as South Africa, Kenya, and Nigeria are experiencing a significant devaluation of their currencies, which deepens the problem of repaying foreign loans, according to the authors.

The authors pointed out that the poor countries resorted to borrowing from the International Monetary Fund and the World Bank to face the risk of financial collapse. The IMF has already provided emergency loans to 40 countries by the end of March, and the World Bank has provided $ 14 billion to support relief efforts. 
However, the IMF and the World Bank recognize that these sums will not be sufficient, and for this reason, they have invited G20 countries to suspend the recovery of interest on loans to developing countries.

On April 15, all G20 countries pledged to suspend the repayment of those loans until the end of the year, except for China, which has signed the group’s pledge but added ironic reservations, the authors describe.
China has excluded hundreds of large loans it made under the "One Belt One Way" initiative to develop infrastructure, and the pro-government Global Times announced a day after the G20 statement, that "preferential loans" - like those provided by the Export Bank And the Chinese import - will not comply with the decision of the group. 
The Export-Import Bank of China has funded more than 1,800 projects under the One Belt One Way initiative in dozens of countries.
Preferential or aggressive treatment?
The authors added that, based on reliable information from multiple sources, China loaned 67 developing countries more than $ 120 billion between 2013 and 2017, and most of these loans were part of the "One Belt One Road" initiative. Ended 29 / p

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On 5/3/2020 at 7:55 AM, yota691 said:

China's loans to countries threaten emerging markets

Economy | 02:32 - 02/05/2020

 
image
 
 

 

 

Follow-up - Mawazine News

The crisis that the world is going through due to the spread of the Corona virus has depleted the reserves of the less wealthy countries, leaving them unable to commit to paying their external debts.
Although the G20 countries pledged to reschedule the debt to help overcome the difficult situation in the global economy, China seemed to tweet out the swarm.
In their report published by the American "Foreign Affairs" magazine, the writers Ben Steele and Benjamin Dela Rocca said that the new Corona virus has caused the engine of the global economy to stop completely. Global growth is expected to drop from 2.9% last year to a negative growth rate in 2020, which has not happened since World War II until 2009. 
It is clear - according to the report - that the process of recovering the global economy will be slow and painful, as government restrictions to prevent the virus from reappearing will hinder the resumption of the production and consumption chain as required, as well as causing many borrowers to default on loans and bankrupt some Corporations, and layoffs will lead to growing unemployment.
The authors stressed that the consequences of the global economic recession will not affect all countries of the world to the same degree, because poor countries suffer from poor health infrastructure, which hinders their efforts to stop the outbreak of the Corona virus, and that individuals suffer from accumulated debts even before the outbreak of the virus, which imposed on them financial burdens Additional.
 Capital withdrawal
Foreign investors are now withdrawing their capital from emerging markets and returning them to richer countries, in search of a safe haven. As a result, countries such as South Africa, Kenya, and Nigeria are experiencing a significant devaluation of their currencies, which deepens the problem of repaying foreign loans, according to the authors.

The authors pointed out that the poor countries resorted to borrowing from the International Monetary Fund and the World Bank to face the risk of financial collapse. The IMF has already provided emergency loans to 40 countries by the end of March, and the World Bank has provided $ 14 billion to support system" rel="">support relief efforts. 
However, the IMF and the World Bank recognize that these sums will not be sufficient, and for this reason, they have invited G20 countries to suspend the recovery of interest on loans to developing countries.

On April 15, all G20 countries pledged to suspend the repayment of those loans until the end of the year, except for China, which has signed the group’s pledge but added ironic reservations, the authors describe.
China has excluded hundreds of large loans it made under the "One Belt One Way" initiative to develop infrastructure, and the pro-government Global Times announced a day after the G20 statement, that "preferential loans" - like those provided by the Export Bank And the Chinese import - will not comply with the decision of the group. 
The Export-Import Bank of China has funded more than 1,800 projects under the One Belt One Way initiative in dozens of countries.
Preferential or aggressive treatment?
The authors added that, based on reliable information from multiple sources, China loaned 67 developing countries more than $ 120 billion between 2013 and 2017, and most of these loans were part of the "One Belt One Road" initiative. Ended 29 / p

 

It is an interesting mix.....you have the Country of China making loans....and then the AIIB doing the same......of which China is a major player...

 

Where have we seen that blue print before....?

OH......Western countries and the IMF.....

 

It's all in how you use leverage for control.....quite a battle ahead!    CL 

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