Ethiopia’s Prime Minister Abiy Ahmed with China’s President Xi Jinping in Beijing. PHOTO | AFP
Ethiopia became the first country on the continent to have its
Chinese debts restructured even as it became apparent that several other
countries were waiting for loan concessions to avert distress.
On
Thursday, Ethiopia announced that China had agreed to restructure some
of its loans, including the one for the $4 billion railway linking its
capital Addis Ababa with Djibouti.
Prime Minister Abiy
Ahmed said the loans would be restructured, with a further 20-year
extension, which will see its annual repayments come down to an
affordable level.
It is understood that Djibouti could
also be on the way to enjoying reprieve, given that its debts from
Beijing were already choking it.
The country has seen
its debt to GDP ratio raise 88 per cent, the latest report from Centre
for Global Development shows, even as it ramps up its port
infrastructure investment already running into billions of dollars.
During
the summit, some African countries got a reprieve when Beijing decided
to write off interest on some of their loans even as China said it was
not to blame for the debt distress some of these countries found
themselves in.
President Xi said that they would be writing off interest-free
loans due by the end of this year for heavily indebted African
countries, as well as Africa’s interior and small island nations.
This
statement served as a reality check for Beijing’s ties with the
continent, their growing appetite for its loans and the realisation of
debt sustainability fears.
Chinas special envoy for
Africa, Xu Jinghu said that Beijing understand the sentiments out there
that they are burdening African countries with debt, but if you keenly
look at the debt profiles, China is not their main creditor.
China
will implement eight major initiatives with Africa in the next three
years even as some previous pledges remain unfulfilled.
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