Connect with us

Asia Pacific

After Sri Lanka, China Indebting Pakistan, Tajikistan and Turkmenistan

Published

on

How has China Indebted Pakistan, Tajikistan, Turkmenistan, Laos and many other nations across the world?  Why Turkey’s currency crisis is adding to the financial troubles of developing Asian economies that have taken huge loans from China under the OBOR Project? Is China waging an economic war small, developing countries and enslaving them?

Loans from China help developing economies pay for the infrastructure developments they need to promote economic growth, but heavy debt-servicing costs endanger to undermine their economic stability.

The Center for Global Development, a U.S. think tank, says Laos, the Maldives, Mongolia, Pakistan few other nations taking part in the OBOR Project are already at severe peril.

Mongolia’s debts are now around eight times the nation’s foreign exchange reserves, while the debts of Laos and Kyrgyzstan exceed 100% of their GDP.

Deeply indebted nations are more helpless against a sudden currency devaluation. As their currencies fall in value, it becomes tougher for them to pay off their loans, which are largely denominated in dollars.

The IMF has long played the role of a global lender. But no nation is happy to take IMF assistance due to its stringent austerity measures. With China emerging as a substitute lender, some countries have started to avoid the IMF even if that means being exposed to unpredictable risks. Turkey, the epicentre of the present financial turbulence, has steadfastly refused IMF assistance, while Pakistan is also getting lured by Chinese soft loans.

Yet, as Pakistan becomes more dependent on China, fiscal regulation will take a back seat, increasing the prospect of being overburdened by exorbitant debt. Pakistan’s external debt has risen by 50% over the past three years, reaching nearly $100 billion. Approximately 30% of that debt is owed to China.

A global finance expert states that the IMF has made the lending framework more amenable. Still, for developing economies, Chinese assistance, which claims that it does not intervene in domestic affairs, looks more appealing.

This means that as long as troubled nations continue to rely on China, their fundamental difficulties will not be solved, and their debt may keep building-up. For instance, Sri Lanka recently handed over the right to manage the Port of Hambantota to a Chinese company as they were unable to pay debts.

A high-speed railway being constructed in Laos costs about $6 billion, or about 40% of the nation’s GDP. China is funding approximately 70% of the cost, but repaying those loans will be a massive strain on the economy.

Turkmenistan is fighting an economic crunch and liquidity crisis due to debt repayments to China. Tajikistan has sold the right to develop a gold mine to a Chinese company in lieu of refunding the loans.

The IMF has traditionally been the “Help Desk” for economically troubled nations. In exchange, IMF requires the nation to follow economic reforms by slashing spending or hiking taxes. China’s willingness to provide loans may offer debtors a momentary reprieve from such restraints, but at the cost of their sovereignty.

More News at EurAsian Times

Advertisement
Advertisement

Facebook

FEATURED

ARMY-INDIA ARMY-INDIA
Featured1 hour ago

After Ladakh, Why Gilgit-Baltistan Could Be Next Big Flash Point Between India And China?

In a bid to gain further control on the disputed Gilgit-Baltistan region, Islamabad has decided to upgrade its status as...

sharif-modi-meeting sharif-modi-meeting
Featured3 hours ago

Nawaz Sharif’s Speech Against Pakistan Army Widely Celebrated In India – Imran Khan

Pakistan PM Imran Khan denounced former PM Nawaz Sharif and stated that the opposition has only one agenda i.e. how...

INDIAN-ARMY INDIAN-ARMY
Asia Pacific14 hours ago

Indian Army Has Deployed Additional 100,000 Troops Near The LAC – Top Chinese General

Despite the sixth round of Corps Commander level meeting between India and China which failed to provide any significant breakthrough,...

F18-India-Deal F18-India-Deal
Featured14 hours ago

NATO Commitment Forces Germany To Acquire F-18 Super Hornets & Reduce Number Of Typhoons

German President Frank-Walter Steinmeier is looking to procure the new Eurofighter Typhoons and F-18 Super Hornets to bridge the gap...

INDIA-CHINA INDIA-CHINA
Expert Reviews16 hours ago

‘Hot Winters’ Ahead – China Says PLA Needs To Teach A Harsh Lesson To ‘Insincere’ India – OPED

The portents of war between China and India seem to be getting more and more darker by every passing day....

SAAB-GRIPEN SAAB-GRIPEN
Featured22 hours ago

SAAB Delivers Gripen-E Jets To Brazil; Offers ‘Exceptional Deal’ To The Indian Air Force

With India’s new FDI model under the new indigenization drive, SAAB has seen it as a lucrative offer and is...

F-35-INDIA F-35-INDIA
Europe23 hours ago

After Rafale Jets, This Air Force Wants Stealth F-35s That Was Once Meant For Turkey?

While some recent reports indicated that with the arrival of F-35s, UAE cold shed some of its F-16s and sell...

j20-vs-tejas j20-vs-tejas
Asia Pacific1 day ago

Taiwanese Expert Says ‘Bathrooms Best Place To Hide’ During Chinese Air Raids, Missile Attack

As tensions between China and Taiwan are only increasing day by day, former Ministry of Defense advisor Sung Chao-wen on...

SU-30-MKI SU-30-MKI
Featured1 day ago

Indian SU-30 MKI Jets Loaded With BrahMos Missiles Practice Hitting Chinese Assets Far Away From Ladakh

Soaring tensions between India and China in Ladakh has seen both the sides deploying thousands of troops, heavy artillery and...

China-and-India China-and-India
Asia Pacific1 day ago

India-China War Highly Unlikely; Beijing Only Testing Indian Resilience – Experts

India-China War: The joint statement following the meeting said that ministers had a “frank and constructive discussion on the developments...

Advertisement