African‘ debt issue’ needs sound solution
The world economy is under great pressure from the deadly pandemic, with some relatively vulnerable economies in Africa facing the risk of losing the ability to pay their debts on time. As a debtors for African countries, China vows to actively promote the implementation of the debt service suspension initiative from G20 countries in a bid to relieve pressure on African countries.
China and Africa maintain long-term and solid cooperation, and have been joining hands to combat COVID-19. It is the 20th anniversary of the Forum on China-Africa Cooperation. China’s Foreign Minister Wang Yi on
Sunday stressed at a press conference that China will continue to stand by Africa as it fights the virus. Also, China will continue to work with Africa on development capacity-building. Wang said that China will work with other G20 members to implement the debt service suspension initiative to ease Africa’s debt burden, and is also considering further bilateral support for African countries under the greatest strain to help Africa.
The coronavirus has brought different levels of damage to African countries. Those in East Africa with relatively better economic backgrounds are more resilient to the attack, with debt repayment abilities less impacted. Some less-developed economies in West Africa will inevitability encounter difficulties repaying their debts on time, including Mali and Sierra Leone, which have vulnerable economic structures.
For countries facing extreme challenges, China may increase grants which do not need to be paid back, among other supportive measures. China’s support of projects concerning people’s livelihoods, like constructing schools and hospitals, may be enhanced so as to speed up the resumption of production. From a long-term perspective, China will continue to support infrastructure construction in African countries to help their industrialization and modernization, the essential direction of China-Africa cooperation.
In the meantime, the possibility exists that China will offer writeoffs for interest-free loans due and unpaid by some of the most impoverished countries on the continent in accordance with international standards and after comprehensive evaluation. China is willing to hold talks on the basis of equality and mutual benefit.
There are essential differences in the foreign assistance from China and Western countries. China adopts flexible capital approaches including grants, preferential loans and blended methods. More efforts focus on supporting the development of Africa’s production capacity – this is a vital characteristic of China’s work.
China has helped build factories in the Republic of Guinea and Tanzania, among other countries. Projects aiming to boost production capacity require long-term assistance since training in production capacities and management expertise need to be carried out after a physical facility is completed. Western countries do not have the same level of interest in such areas.
Instead, Western countries tend to adopt relatively single capital approaches with budget support – and with political strings attached – for governance improvement projects, based on the experience of Western countries themselves. And if projects do not meet the reform targets set by Western countries, their aid will be suspended or stopped.
The author is an associate research fellow at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce. bizopinion@globaltimes. com.cn