The International Forum for Right and Security (IFFRAS) reported that recent joint research by the Peterson Institute for International Economics, Kiel Institute for the World Economy, and the Centre for Global Development Aid Data concluded that it uses these contracts to debt-trap a nation.
The study referred to in this article looked at 100 contracts signed during 2000 – 2020. It systemically analyzed the legal terms of lending followed by Chinese state-owned entities and government borrowers across 24 developing countries in Africa, Asia, Eastern Europe, Latin America, and Oceania, with a commitment amounting to USD 36.6 billion.
Chinese credit terms remain highly skewed in favor of Chinese lenders over other creditors. The credit offered contains collateral arrangements, no Paris Club clauses, clauses allowing lenders to influence debtors' domestic and foreign policies, etc. Generally, the credit terms are kept secret from other creditors, including the IMF and other international agencies, reported IFFRAS.
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