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The Benguela Railway in Angola was built by China, but Angola owes almost 5 per cent of its national income to China to service its wider debts. Photo: Xinhua

Poorest nations to pay China US$14 billion to service debts in 2022: report

  • China is the largest single creditor to developing countries after the World Bank, according to research by Fudan University
  • With payments to Chinese creditors exceeding 2 per cent of gross income in eight nations in 2022, the report urges Beijing to do more to support restructuring
The world’s poorest nations will pay China and its lenders almost US$14 billion this year in debt servicing costs, according to new research that urges Beijing to do more to support restructuring for those who need it.

In total, 68 such countries will pay US$52.8 billion this year in debt costs, according to a report by the Green Finance & Development Centre at Fudan University in Shanghai. More than a quarter of that will go to China, the report estimates, as Beijing is one of the largest lenders to developing nations.

At the end of 2020, the 68 nations collectively owed about US$110 billion to various Chinese lenders in official bilateral debt, the report estimates, up from US$105 billion in 2019. China was the largest single creditor after the World Bank’s International Development Association, the report says.

The repayment costs to official Chinese creditors will exceed 2 per cent of gross national income in eight nations in 2022. Angola is worst off, owing almost 5 per cent of its national income to China to pay interest and repay the principal of previous borrowings.

Given China is the main creditor to nations eligible for debt relief, it “has more responsibility and opportunities to provide bilateral and multilateral support for debt restructuring than other countries”, Yue Mengdi and Christoph Nedopil Wang wrote in the report, released on Monday.

Although China has participated in debt relief, other international lenders need more transparency and clarity on the total size of Chinese lending, they said.

In late 2020, China’s government said it had suspended debt servicing requirements on more than US$2 billion in debt under an international effort to help poorer nations through the pandemic. But that initiative ended in December last year. In total, Chinese lenders suspended US$5.7 billion in repayments, according to a report in late 2021 by the Jubilee Debt Campaign.