Zambia Reaches Watershed Deal on China Debt – WSJ
June 22, 2023 – Excerpts:
PARIS—Zambia has reached a deal with China and Western creditors to extend repayment of $6.3 billion in loans, according to people familiar with the matter, the result of drawn-out negotiations that are seen as a test case for developing nations contending with massive debts accumulated under China’s Belt and Road initiative.
Ghana, Sri Lanka and Ethiopia are already negotiating debt relief with Beijing on billions of dollars of loans, and officials at the IMF and the World Bank have previously said they hoped that a debt deal for Zambia would encourage other developing countries to follow suit.…
China is responsible for $5.94 billion of Zambia’s overall external debt, which is around $16.76 billion, according to the IMF.
In Ghana, with an economy more than three times the size of Zambia’s, China is responsible for a much smaller slice of the country’s external debt—$1.9 billion out of an overall foreign-currency debt pile of $28.87 billion, according to the IMF. Sri Lanka owes $7.38 billion to Chinese creditors out of overall external debt of around $41.47 billion, according to the IMF. Sri Lanka’s central bank also has $2.04 billion in foreign-currency swaps with other central banks, with most of that amount coming from the People’s Bank of China.
The deal with China and Zambia’s other government creditors… It will allow the IMF to pay out a $188 million installment of Zambia’s $1.3 billion bailout that has been held up since April.
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And here we go again. Tax dollars from America’s hardworking, tax-paying U.S. citizens are now going, via the IMF, to bail out Zambia, so they can pay off their debts to … China (and other western creditors).
The People’s Bank of China (PBOC) makes loans, through their “Belt and Road Initiative,” to the likes of Zambia, Sri Lanka, Ghana, and others that end up ‘going sour.’
The International Monetary Fund (IMF) then steps in to, essentially, bail out China for their ‘risk management’ errors.
The U.S. contributes 17.46% to the IMF quota – which means that U.S. taxpayers will be, through the IMF pipeline, paying creditors, one of the big ones being China, 17.46% of Zambia’s $1.3 billion IMF bailout – a ‘cool’ $227 million.
The $3 billion IMF bailout to Sri Lanka, to also assist them on paying down their China “Belt and Road” debts, means that U.S. taxpayers are sending an additional $525 million to China (and certain other creditors) – again, for their risk management errors.
Washington Republicans and Democrats are evidently clueless to this ongoing fiscal fiasco.
It is time for America to launch an economic acceleration plan that provides liquidity to its hard-working, tax-paying U.S. citizens – a plan that will restore financial security for millions of American families, generate massive new tax revenue gains and outlay reductions for federal, state, and local government entities, and get America back on track for long-term fiscal stability and economic prosperity.
America’s Main Street Republicans have that plan – loaded up and ready to launch.
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