Zambia, Ethiopia may face tougher debt relief talks over ‘hidden’ Chinese lending
- Research exposing under-reported debts reinforces concerns about lack of transparency, according to economist
- It’s also likely to complicate ongoing debt restructuring negotiations under the G20’s Common Framework
A report exposing the “hidden” Chinese debts of countries like Zambia and Ethiopia is expected to complicate their ongoing debt relief talks under the G20’s so-called Common Framework.
The total value of those under-reported debts – external obligations between state-linked entities that are not covered under official public debt statistics – could be around US$385 billion globally, according to last week’s report by AidData, a research lab at the College of William and Mary in the US.
The revelations in the report “somewhat reinforce concerns about a lack of transparency and, at the very least, debt restructuring talks will get tougher”, said Virag Forizs, an Africa economist at London-based consultancy Capital Economics.
“It seems likely that recently uncovered debts will complicate debt restructuring talks,” Forizs said. “These previously undisclosed debts are contingent liabilities for their respective governments and thus could push up total public debt burdens in the future.”