Last week, the outgoing World Bank President seemed slightly exasperated as he explained that despite the multilateral lender’s best efforts to reduce the debt burden of emerging economies, they had reached an impasse on debt restructuring with China.
Yet, his reaction was less intense than the International Monetary Fund (IMF) Managing Director's. According to her, they would have to “drag China” to work out restructuring terms for the countries that owe them to prevent a “catastrophe”.
Evidently, China is at the heart of debt restructuring conversations. According to the IMF, China is the largest bilateral creditor to most African countries but not the largest creditor. Most of these countries' loans are still being owed to multilateral institutions. 47% of the loans owed by International Development Association (IDA) countries—as of December 2021, are owed to multilateral organisations, while 32% were owed to bilateral creditors.
Between 2010 and 2021, the World Bank granted IDA countries $166 billion in loans, while China—the countries’ second largest creditor, lent the countries $138 billion. The World Bank has also tried to ease some countries’ fiscal pressure—for example, Sri Lanka’s concessional funding request was granted in December 2022.
However, countries like Zambia, Ethiopia, Ghana and Angola (let’s call them ZEGA) have yet to conclude how their loans will be handled, even though some, like Zambia, began requesting restructuring in 2020. To reduce the impact of this distress on African countries like ZEGA, large lenders like the World Bank, International Monetary Fund (IMF) and the Paris Club created the Global Sovereign Debt Roundtable (GSDR) to begin discussions on debt restructuring for African countries. China was invited to this roundtable, too. Yet, since its creation in February, they’re yet to reach an agreement.
Using data from the China Loans to Africa (CLA) database, this article will paint a picture of how African debtors got here in the first place. Who do these countries owe money