Home Business The world’s new largest creditor of debtor countries

The world’s new largest creditor of debtor countries

by marusia

In recent decades, China has become the largest creditor of developing countries, overtaking the United States, according to the results of the World Bank, the AidData research project at the College of William and Mary, Harvard University and the Kiel Institute of World Economics in Germany.

From 2000 to 2021, China sent about $240 billion in emergency aid to 22 countries facing serious debt problems. This includes Argentina, Pakistan and Nigeria. As a source of loans to rescue countries with debt difficulties, Beijing uses the huge reserves of its Central Bank — they are estimated at $ 3.3 trillion.

Basically, loans were provided through swap agreements of the People’s Bank of China (PBOC) – in fact, these are loans with a low interest rate between central banks in yuan. For several years, Beijing has sent financial assistance to countries in need in a larger volume than the International Monetary Fund (IMF). Analysts say that the purpose of concluding such agreements was to stimulate the use of Chinese currency in international trade.

The current policy of the Central Bank of China in a conversation with Bloomberg Carmen Reinhart. The expert sees in the rescue of debtor states a serious crisis and the beginning of a long period of debt difficulties for these countries. In addition, in her opinion, the PRC is not trying to solve the problems of poor countries, which are facing more serious financial problems due to rising debts.

American officials agree with Reinhart’s opinion. They emphasize that China has lured developing countries into a debt trap, and now they are asking for help from the IMF.

A year ago, the World Bank reported that the policy of mass lending to developing countries, which has been carried out by the Chinese authorities in recent decades, has led to the fact that many governments have stopped paying their debts. Since 2008, if we take into account hidden defaults, China has faced 71 loan restructuring, that is, in fact, non-payment of debts. African countries, Cuba, Iraq, Kazakhstan, Kyrgyzstan, Ukraine, Tajikistan, Venezuela went to it.

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