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Looming 'debt risks' threaten Belt and Road countries
[ATimes] It has always been epic in scale. At the heart of the Belt and Road Initiative are the ‘New Silk Road’ superhighways, connecting China with 68 countries and 4.4 billion people across Asia, Africa, the Middle East and Europe in a labyrinth of multi-trillion-dollar infrastructure projects.

Launched in a fanfare of rhetoric by President Xi Jinping in 2013, this grandiose program has become an extension of Beijing’s global ambitions and the centerpiece of its economic foreign policy.

Yet because of its monumental scope, there are “sovereign debt risks” lurking in the background of the planned “US$8 trillion network of transportation, energy and telecommunications infrastructure” joint ventures, the Center for Global Development has highlighted.

In a report entitled Examining the Debt Implications of the Belt and Road Initiative from a Policy Perspective, the Washington-based think tank underlined the problems ahead when it pointed out that 23 countries could be prone to “debt distress.”

Of the group, Pakistan, Djibouti, the Maldives, Laos, Mongolia, Montenegro, Tajikistan and Kyrgyzstan were rated in the “high risk” category.

To illustrate those concerns, Sri Lanka announced in December that it would hand over control of the Hambantota port, which was financed by loans, to China Merchants Port Holdings, a state-owned enterprise.

The country is in the “Group of 23” singled out in the report, while the 99-year lease deal with China enraged Sri Lankan government critics for threatening the nation’s sovereignty.

“The price being paid for reducing the China debt could prove more costly than the debt burden Sri Lanka seeks to reduce,” N. Sathiya Moorthy, a senior fellow specializing in Sri Lanka at the Observer Research Foundation in New Dehli, told the New York Times.

While the Center for Global Development study acknowledged that the Belt and Road Initiative was “unlikely to cause a systemic debt problem” throughout the ‘New Silk Road’, it still “significantly increased the risk of a sovereign debt default” in a number of countries.

Pakistan, the report claimed, was “by far the largest [nation] at high risk,” estimating that China is financing around $50 billion in infrastructure and energy projects.

These will include the Gwadar Port, which is one of several major developments in the region that make up the China-Pakistan Economic Corridor.

“Adding to Pakistan’s risk are the relatively high-interest rates being charged by China,” the nonprofit Center for Global Development stated.
Posted by: 3dc 2018-03-07
http://www.rantburg.com/poparticle.php?ID=509668