75 poorest nations facing China's debt gauntlet, have to pay 25 bn Dollars in 2025

United News of India

2 days ago

New Delhi, May 27 (UNI) Pakistan is among the 75 poorest countries in China's debt trap under President Xi Jinping's Belt and Road Initiative (BRI) and have to repay a record 22 billion Dollars in 2025, a study has said.
''The most vulnerable nations on earth are facing a tidal wave of debt repayments as a Chinese lending boom starts to be called in,'' report has warned.
Vulnerable countries to pay record 22 bn Dollars this year, mostly relating to loans issued under Xi Jinping's belt and road initiative.
The study, published on Tuesday by Australian foreign policy think tank the Lowy Institute and reported by The Guardian said that in 2025 the poorest 75 countries were on the hook for record high debt repayments 22 bn US Dollars to China. The 75 nations' debt formed the bulk of the total 35 bn Dollars calculated by Lowy for 2025.
'China spent 240 bn Dollars on belt and road bailouts from 2008 to 2021, study finds…Now, and for the rest of this decade, China will be more debt collector than banker to the developing world,' the report said.
The pressure to repay was putting strain on local funding for health and education as well as climate change mitigation.
However, 'China's lending has collapsed exactly when it is needed most, instead creating large net financial outflows when countries are already under intense economic pressure,' it said.
The loans were largely issued under President Xi Jinping's signature BRI.
The lending spree turned China into the largest supplier of bilateral loans, peaking with a total of more than 50bn Dollars in 2016 – more than all western creditors combined.
The BRI focused primarily in developing nations, where governments struggled to access private or other state-backed investment. But the practice has raised concerns about Chinese influence and control and drawn accusations that Beijing was seeking to entrap recipient nations with unserviceable debt. Last month another analysis by the Lowy Institute found that Laos was now trapped in a severe debt crisis, in part because of over-investment in the domestic energy sector, mostly financed by China.
China's government denies accusations it deliberately creates debt traps, and recipient nations have also pushed back, saying China was a more reliable partner and offered crucial loans when others refused.
But the Lowy report said the record high debt now due to China could be used for 'political leverage', noting that it comes amid huge cuts to foreign aid by the Trump administration.
The report also highlighted new large-scale loans given to Honduras, Nicaragua, Solomon Islands, Burkina Faso and the Dominican Republic, all within 18 months of those countries switching diplomatic recognition from Taiwan to Beijing.
China also continues to finance some strategic partners, including Pakistan, Kazakhstan, Laos and Mongolia, as well as countries that produce critical minerals and metals, such as Argentina, Brazil and Indonesia.
But the situation also put China in a bind, pulled between diplomatic pressure to restructure unsustainable debt in vulnerable nations and domestic pressure to recall loans amid China's own economic downturn.
China publishes little data on its BRI scheme, and the Lowy Institute said its estimates – based on World Bank data – likely underestimated the full scale of China's lending. In 2021 Aid Data estimated China was owed a 'hidden debt' of about 385 bn Dollars.
UNI RB GNK 1810