Paris Club hopeful China will approve debt relief

Paris Club, an informal group of officials from 22 creditor countries, says it is confident that China will join debt relief efforts being undertaken by bilateral and multilateral credit institutions.

Odile Renaud-Basso, Paris Club chair, told Bloomberg in an interview that China has participated in meetings where other creditors reached an agreement.

“It has not always been easy, but they have been very constructive and at the end, the outcome has been good. Now we need to monitor the implementation,” Renaud-Basso, who is also director-general of the French Treasury, said.

Jubilee Debt Campaign, a relief group, estimates that African countries owe China $150 billion.

Like in Nigeria, a chunk of these debts are tied to major infrastructural projects like roads, ports and railways.

Some African countries, including Nigeria, have begun negotiations with creditors to work out debt relief options including a moratorium on debt repayments to allow them to focus on health spending.

Some have also expressed fears that seeking debt moratorium may hurt credit access in future or trigger default clauses.

“We still believe that there is some room to find a way for the private creditors to intervene without triggering either a default, which will be damaging for the countries which have still market access or even a downgrade,” Renaud-Basso said.

“Some countries may need more than just a moratorium for six months or one year. We may need a deeper debt alleviation.”

In April, David Malpass, president of the World Bank, announced that G20 countries have agreed to give debt relief to the world’s poorest countries.

The Paris club also said it has received 13 requests for a temporary suspension of debt payment out of 73 eligible countries.

World leaders, including Olusegun Obasanjo, former president of Nigeria and Ngozi Okonjo-Iweala, former managing director of the World Bank, had asked the G-20 for a $44 billion debt relief for African countries to tackle the novel coronavirus.