You won’t get bailout, US warns indebted African countries

Tibor Nagy, the US assistant secretary of state for African affairs, has warned that African countries accumulating debt they cannot pay back should not expect to be bailed out by western-sponsored debt relief.

Speaking in Pretoria, South Africa on Monday, Nagy said nations risk losing control of strategic assets if they cannot repay the Chinese loans.

The International Monetary Fund and World Bank began the Heavily Indebted Poor Countries (HIPC) Initiative in 1996 to help the world’s poorest countries clear billions of dollars worth of unsustainable debt.

According to an IMF report released in 2018, Africa is facing another potential debt crisis today, with around 40 per cent of low-income countries in the region now in debt distress or at high risk of it.

Nagy said: “We went through this, just in the last 20 years, this big debt forgiveness for a lot of African countries”; referring to the HIPC programme.

“I certainly would not be sympathetic, and I do not think my administration would be sympathetic to that kind of situation.”.

Under Donald Trump’s administration, the US has criticised China for pushing poor countries into debt, mainly through lending for large-scale infrastructure projects.

Sri Lanka formally handed over commercial activities in its main southern port in the town of Hambantota to a Chinese company in 2017 as part of a plan to convert $6 billion of loans that Sri Lanka owes China into equity.

US officials have warned that a strategic port in the tiny Horn of Africa nation of Djibouti could be next, a prospect the government there has denied.

Data from the China-Africa Research Initiative at Washington’s Johns Hopkins University School of Advanced International Studies has shown that China loaned $125 billion to Africa between 2000 and 2016.

– The Cable