“Sometimes I eat once a day and if no one remembers to help me with food from the neighborhood, then I just starve.”Ī few months after Zambia defaulted, researchers found that it owed $6.6 billion to Chinese state-owned banks, double what many thought at the time and about a third of the country’s total debt. “I just sit in the house thinking what I will eat because I have no money to buy food,” said Marvis Kunda, a blind 70-year-old widow in Zambia’s Luapula province whose welfare payments were recently slashed. A United Nations estimate of Zambians not getting enough food has nearly tripled so far this year, to 3.5 million. Inflation in Zambia has since soared 50%, unemployment has hit a 17-year high and the nation’s currency, the kwacha, has lost 30% of its value in just seven months. By November 2020, with little reserves left, Zambia stopped paying the interest and defaulted, locking it out of future borrowing and setting off a vicious cycle of spending cuts and deepening poverty. dollars that it used to pay interest on loans and to buy major commodities like oil. That refusal added to the drain on Zambia’s foreign cash reserves, the stash of mostly U.S. It refused at first to even join in multinational talks, negotiating separately with Zambia and insisting on confidentiality that barred the country from telling non-Chinese lenders the terms of the loans and whether China had devised a way of muscling to the front of the repayment line.Īmid this confusion in 2020, a group of non-Chinese lenders refused desperate pleas from Zambia to suspend interest payments, even for a few months. In the past under such circumstances, big government lenders such as the U.S., Japan and France would work out deals to forgive some debt, with each lender disclosing clearly what they were owed and on what terms so no one would feel cheated.īut China didn’t play by those rules. The loans boosted Zambia’s economy but also raised foreign interest payments so high there was little left for the government, forcing it to cut spending on healthcare, social services and subsidies to farmers for seed and fertilizer. The president’s chief economic adviser tweeted last month, “Salaries or default? Take your pick.” In Kenya, the government has held back paychecks to thousands of civil service workers to save cash to pay foreign loans. In Pakistan, millions of textile workers have been laid off because the country has too much foreign debt and can’t afford to keep the electricity on and machines running. Two of them, Zambia and Sri Lanka, have already gone into default, unable to make even interest payments on loans financing the construction of ports, mines and power plants. On top of that is the recent discovery that borrowers have been forced to put cash in hidden escrow accounts that push China to the front of the line of creditors to be paid.Ĭountries in AP’s analysis had as much as 50% of their foreign loans from China and most were devoting more than a third of government revenue to paying off foreign debt. And it’s draining foreign currency reserves these countries use to pay interest on those loans, leaving some with just months before that money is gone.īehind the scenes is China’s reluctance to forgive debt and its extreme secrecy about how much money it has loaned and on what terms, which has kept other major lenders from stepping in to help. An Associated Press analysis of a dozen countries most indebted to China - including Pakistan, Kenya, Zambia, Laos and Mongolia - found paying back that debt is consuming an ever-greater amount of the tax revenue needed to keep schools open, provide electricity and pay for food and fuel.
0 kommentar(er)
