Bangladesh Finance Minister AHM Mustafa Kamal has warned that developing countries should think twice about borrowing more through China’s Belt and Road Initiative as global (BRI) inflation and slow growth put pressure on indebted emerging markets. Puts.
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In an interview to the Financial Times, Kamal also said that China needs to be more stringent in the valuation of its loans, amid concerns that bad credit decisions have pushed countries into a debt crisis. Pointing to Sri Lanka, where Chinese-backed infrastructure projects that failed to generate returns had escalated to a serious economic crisis, the finance minister said, “Whatever the situation [that] Running around the world, everyone must be thinking twice to agree to this project (BRI).
“Everyone is blaming China. China cannot disagree. It is their responsibility,” he said.
He also said that the Sri Lankan crisis highlighted that China was not rigid in deciding which projects to support. He added that a project needs to be “studied in depth” before lending it. “After Sri Lanka . . . we realized that the Chinese authorities were not paying attention to this particular aspect, which is very important.”
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Last month, after Russia’s full-scale invasion of Ukraine weighed on its foreign reserves, Bangladesh became the latest Asian country to approach the IMF for financing as commodity prices rise.
China’s BRI partner country owes Beijing about $4 billion, or 6 percent of its total foreign debt.
Kamal said Bangladesh is seeking more than $4 billion in aggregate from other multilateral and bilateral lenders, including the World Bank, Asian Development Bank, Asian Infrastructure Investment Bank and Japan International Cooperation Agency.
He said he was hopeful that the country would get loans from them. His remarks came after Chinese Foreign Minister Wang Yi visited Bangladesh over the weekend for a meeting with officials, including Prime Minister Sheikh Hasina.
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Sri Lanka, which defaulted on its sovereign debt in May, is in talks with the IMF for an emergency bailout. Pakistan, whose foreign reserves have fallen enough for just a month and a half of imports, last month entered into a preliminary agreement with the fund to release $1.3 billion as part of the current $7 billion aid package.
Bangladesh has been badly hit by the rising energy import bill, with fuel shortages leading to power cuts for several hours a day. Its foreign reserves have also fallen from $ 45 billion a year ago to less than $ 40 billion. However, analysts say the country’s strong export sector, especially its apparel trade, has helped it survive the recent global shocks and that its reserves are still sufficient for nearly five months’ worth of imports, giving the country some relieved. This meant that although “everyone is suffering” [and] We are also under pressure”, Bangladesh was not in danger of defaulting like Sri Lanka, Kamal said.
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