A bipartisan group of 16 US senators urged the Trump administration to block the International Monetary Fund (IMF) from bailing out the countries that have obtained loans from China under its infrastructure development plan.
The letter to Secretary of State Michael Pompeo and Treasury Secretary Steve Mnuchin mentions Pakistan, Sri Lanka and Djibouti among the countries that have accepted billions of dollars in loans from China but are unable to repay.
Zambia is seeking a US$1.3 billion bail out from the IMF but already has over 8 billion in Chinese loans.
The loans come from the $8 trillion Belt and Road Initiative (BRI) that China says is meant to develop infrastructure in friendly countries for linking them to global trade routes.
But US senators disagree.
“We write to express our concern over bailout requests to the IMF by countries who have accepted predatory Chinese infrastructure financing,” the 16 senators said in the letter they sent to the two secretaries earlier this week. They claimed that China was using the debt to control the policies of the borrowing nations.
The IMF is an international lending institution and the United States is its largest contributor with some $164 billion in financial commitments.
But Secretary Pompeo told CNBC news channel last week that Washington was watching. “Make no mistake, we will be watching what the IMF does. There’s no rationale for IMF tax dollars — and associated with that, American dollars that are part of the IMF funding – for those to go to bail out Chinese bond holders or China itself,” he said.
During the just-ended Forum on China-Africa Cooperation (FOCAC) summit in Beijing, President Edgar Lungu and a delegation of ministers clinched trade and economic deals aimed at complementing development efforts as enshrined in the Seventh National Development Plan.
Some of the major agreements and memoranda of understanding (MoUs) that have been signed are:
A Chinese Government grant to Zambia, of US$30 million for supply of electricity to the Lusaka East Multi-facility Economic Zone and
A US$30 million interest-free loan for economic cooperation to facilitate the reconstruction of Mulungushi Conference Centre in readiness for the African Union heads of State summit in 2022.
President Lungu and his Chinese counterpart President Xi Jinping facilitated the signing of three memoranda of understanding (MoUs) on economic and technical cooperation, the protocol for the export of Zambian honey to China and Belt and Road Initiative.
The Belt and Road Initiative is the Chinese government international project to connect its country to 70 countries through rail and road networks.
Among the business agreements signed are the assessments and preparation of bankable feasibility studies and implementation of Lusaka Mass Transit Railway Corridor project, which will see the construction of a transit railway link to reduce congestion on the roads of Lusaka.
Government also signed two agreements with Huawei to build a better-modernised Zambia. The two MoU’s on National Broadband Access Project and Smart Zambia Phase three project will promote connectivity and modernisation to the telecommunications sector.