China’s ‘Debt Trap’ Pushing Many Asian Countries to Economic Crisis: Experts
New Delhi: On the financial crisis in Pakistan, Bangladesh, Sri Lanka, and many other Asian countries, the experts have expressed their views and said the reason for the financial instability in these countries is somewhere – majorly connected with the loans these countries have taken from China. The communist government of China has provided US dollars to these countries in a huge amount that they cannot even imagine or expect.
Financial Crisis in Nepal, Sri Lanka, and Pakistan
In the view of experts, China has been accused of being a silent orchestrator of the economic crisis that the two South Asian countries – Sri Lanka and Pakistan – are reeling under. Sri Lanka’s tendency to sometimes lean more towards China than India was problematic.
Beijing has been able to lure vulnerable countries like Sri Lanka and Pakistan with irresistible investment plans to bag billions of dollars worth of projects under the BRI initiative.
Nepal, too, is said to be foreseeing an economic crisis and earlier this year banned the import of vehicles and other luxury items, due to declining foreign exchange reserves.
Bangladesh draws serious lessons from Sri Lanka.
With Sri Lanka’s crisis, experts have warned that other countries in the region also need to call upon their governments to draw the necessary lessons from the Island nation.
Warning Bell to Bangladesh!
Bangladesh’s finance minister AHM Mustafa Kamal recently warned developing countries about taking more loans through the China BRI initiative.
Kamal, in an interview with the media pointed to Sri Lanka, where Chinese-backed infrastructure projects that failed to generate returns had led to a severe economic crisis. Whatever the situation is there, but it is going on worldwide, everybody will be thinking twice to agreeing to this project (BRI).”
“Everybody is blaming China. China cannot disagree. It’s their responsibility,” Kamal said. The country, a part of China’s BRI initiative, reportedly owes about $4 billion, or 6 percent of its total foreign debt, to Beijing.
Bangladesh is also seeking up to $4 billion more in total from a range of other multilateral and bilateral lenders, including the World Bank, Asian Development Bank, Asian Infrastructure Investment Bank, and Japan International Cooperation Agency, Kamal added.
Laos – on the way to Bankrupt?
According to several media reports, the south-east Asian nation Laos is also at a high risk of default as the country has taken huge loans from Beijing to build its large-scale infrastructure projects.
The Laos-based financial experts have said, “Laos is at high risk as it is deeply indebted to China for large-scale infrastructure projects.”
According to Singapore-based news media, International rating agency Moody’s downgraded Laos’ credit rating to Caa3 in mid -June, citing “a very high debt burden and insufficient coverage of external debt maturities by (foreign exchange) reserves.
According to the report published by the World Bank in April, preliminary estimates indicated that Laos’ total public and publicly guaranteed debt reached 88 percent of the gross domestic product in 2021. The debt is valued at 14.5 billion US dollars, about half of which is owed to China on loans to fund projects including the China-Laos railway.
(Vinayak)
