The International Monetary Fund (IMF) has approved a bailout for Congo Republic which has been under the weight of loans it took from China. Magically, China gets its money back, and also keeps the prized cobalt mines which had been priced into the loan financing. This is turning out in a different way: a western institution bailing out a country which owes China. For Congo, IMF arrived on time. And because IMF arrived, other nations will knock on the door for help. China smiles!
The International Monetary Fund’s (IMF) executive board approved a bailout worth nearly $449 million for OPEC member Congo Republic on July 11, potentially setting a precedent for other nations struggling under the weight of large debts to China.
China has aggressively courted African nations for investments seen as advantageous to its national agenda.
In Congo, China has provided billions in aid, allowing it to secure rights to mine for cobalt, a material that’s a key component to making lithium-ion batteries used to power electric vehicles—an industry targeted by Beijing for development.
China had already eclipsed both IMF and World Bank as the entity holding the largest official debt in the world: “more than twice the size of the International Monetary Fund and the World Bank combined”, Economist notes. Yes, IMF will get really busy in coming years for that amazing country named China which has simply figured out this planet earth!
According to the report, the amount of foreign debt held by China is 50% greater than previously thought, making it the largest official creditor in the world. More than twice the size of the International Monetary Fund and the World Bank combined, says The Economist. The value of China’s outbound credit lines has surged from virtually nil in 2000 to over $700 billion today but China has kept much of that debt “hidden” by not reporting it to bodies like the IMF. (Fortune newsletter)
A new study by Sebastian Horn and Christoph Trebesch of the Kiel Institute for the World Economy and Carmen Reinhart of Harvard University offers the most comprehensive picture yet of China’s official credit flows (including state-owned banks). It adds to concern about whether China has sowed the seeds for debt problems abroad. They find that nearly half of China’s lending to developing countries is “hidden”, in that neither the World Bank nor the imf has data on it. (Economist)
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Apparently DR Congo had signed off its future long time ago to China. That’s just the small part the of problem, the bigger part is that it will continue to wear the toga of ‘developing’ country for another century, and will also remain ‘unsafe’; because the vultures will continue to destabilise it, both for legal and illegal mining.
The same China is still borrowing from World Bank, and it has remained a ‘developing’ country, allowing it to access more fat loans from World Bank.
Many African countries will still find themselves in Congo’s position, Nigeria may still enter that bracket. Anybody that doesn’t see China as a serious national and economic threat doesn’t see well; mentioning China and credibility on the same breath would be ridiculous anyway.
China is giving them loans, bringing Chinese firms to execute the contracts, essentially taking back their money, but you will remain in debt and your citizens will remain unemployed.
To be liberated, you must learn how to work without China, it’s a joke to believe China; they are not that civil yet.
China or World Bank or IMF – they are all the same. You need to fix your house. If Congo takes money from IMF to pay China, it will be owing IMF. Nothing changes until Congo wants to change from internal.
Exactly, they are all the same with vested interests. Its a tale of being a slave to the immediate because we have refused to see the ultimate. i think our narrative or research should be more on how Africa can begin identify and harness her potentials. Can we really do without foreign aids?
Yes – China did without it. But you need leadership to make that happen.