China announced Thursday that it supports the International Monetary Fund’s (IMF) proposal regarding the distribution of Special Drawing Rights (SDR) allocation to African nations struggling financially due to the covid-19 pandemic.
According to the Bloomberg financial information agency, which cites the Chinese Vice Premier’s speech at the Paris summit on financing African economies, the Asian giant supports the IMF’s idea of using the capital allocation intended for richer countries to finance the economic recovery efforts of weaker African nations.
In the speech, Han Zheng said Beijing wants trade and multilateral creditors and developed countries to take concrete actions to lower the debt burden of the continent that has yet to recover from the economic devastation caused by the largest drop in Gross Domestic Product in 25 years.
Han reiterated that China, which is the largest holder of bilateral debt of developing nations, many of them African, will fully implement the G20 initiative to temporarily suspend payments from the poorest countries.
The indication about Han’s speech comes after the President of France argued that advanced countries should follow the French example and ensure that the money they will receive according to their IMF quota is channeled to help the countries most affected by the pandemic and without the budgetary space to invest in reviving their economies.
The IMF’s US$650 billion DES issue sets aside US$33 billion for African countries, but with a debt of around US$700 billion, the amount is insufficient.
On Wednesday in Paris, Emmanuel Macron argued that the approximately $33 billion that Africa will receive due to the issuance of SDRs could be tripled to $100 billion if the most advanced countries followed his example.
This Thursday in Beijing, the director-general of the Ministry of Foreign Affairs said that China is planning financing and other measures to support African countries, reserving more details for the Forum on China-Africa Cooperation (FOCAC), which should take place in Dakar, Senegal, in November or December.
Wu Peng pointed out that China is providing debt relief to several African countries since last year and has already provided vaccines to more than 40 nations on the continent as it receives requests.
African countries’ debt to China has been a cause for concern by analysts due to the opacity of the contracts, which are often not even disclosed by the parties, preventing them from being accounted for and leading to distrust by Western creditors.
According to the African Development Bank, the continent’s debt is around $700 billion, half of which is owed to China.
