Is China’s investment in infrastructure projects driving Western Balkan nations into debt?
IMF says Beijing-led projects under the ‘Belt and Road Initiative’ are partly to blame for economic problems in the region
Western Balkan nations are facing a growing debt risk, and China-led infrastructure development projects are partly to blame, the International Monetary Fund warned this week.
One example, according to an IMF report released on Monday, is Montenegro, which although having a relatively strong economy is coming under growing debt pressure.
The first phase of the scheme was financed with loans from China’s Export-Import Bank between 2015 and 2017, which “had a key role in raising debt to high levels”, and has cost the country nearly a quarter of its gross domestic product, the report said.
In an effort to service the loans, the government of Montenegro last year slashed its public welfare spending, cut wages for government employees and introduced tax increases on cigarettes, coal and ethyl alcohol.