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US Senate seeks to block IMF bailouts for Countries defaulting on Chinese debt

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IMF Meeting

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.

67 COMMENTS

  1. Fwebene
    But are we that broke that we can't even manage to renovate a conference center?! Zambia yasila. What can we do on our own?
    • Mushota
      The Chinese will reap, rape and Rip Zambia resources and they will control your country before they are done with. Nothing is free, they are not coming to to help, they are coming to Zambia because it benefits them The question is, how does it benefit them? For al lall their investigations, there will be repercussions. This a start of colonialism all over again. Read the Xinua news and you will note that they see Zambia as an investment hub that they will seek retribution in the end. I hold a PhD Thanks BB2014,2016
    • Jay Jay
      Fwebene -renovate of that centre is merely daylight robbery ...renovation or face-lifting a ground-level conference centre in its own yard can never cost $30 million its theft not even $15m...
    • Maharaji
      We are putting our future in a very precarious position.Our leaders are virtually selling us into slavery just like our ancestors sold their fellow brothers into slavery.Instead of borrowing to build manufacturing companies they are borrowing for posh buildings and roads which we will not maintain.Look at the roads done during the late Sata's time they are all cracking and dilapidated- no maintenance.How will we pay back?? We have paid only 2% of the Euro bond so far.Where is the money going to come from for the Chinese debt.
    • Mutulang'oma
      It's not renovation perse, part of the money will go torwards the building of 5 & 4 star hotels and modern car park.
    • Hakaiinde
      How many centuries have we been under the control of the west economically, did we as Zambia see any tangible development as a result of following the IMF?... I say China is a better devil than the West, at least with them we have TAZARA, TAZAMA, the Mongu Kalabo, samfya serenje Chingola Solwezi roads, Hospitals, the list is Long and still counting. Zambia would never have been where it is now without the Chinese. We even have roads to fuss about. So bane don't be jealous like Racist Trump and his bigoted white men. China has done what USA can never do for Africa and Zambia in particular. IMF and the west are only there to cities call us names and punish Africa if we don't meet their will, at least Chine offers carrots with that.
    • Jay Jay
      Mutulang'oma/ Milinso - why should you fill in the blanks for them ...modernization means that...this is the same with the $1.3 Billion carriageway when you quizz them they say we will include hotels and shopping malls along the road...its daylight robbery as such things are never even included in the project brief just like that outdated KKIA design go and look at the original brief and compare it to now its been downsized to steal money!!
    • AKASHAMBATWA
      @1.6 hakainde... why have you called POTUS Trump a racist and bigoted simply because he is white. what did our fellow black man Obama do for Africa compared to what reagan, bush did. Africa is in this problem coz Obama made all the dictators on the african continent and the world over beome more and more emboldened because of his weakness. Now Obama is busy fighting Trump so that Ameria becomes weaker and weaker like he is
    • Sharon
      The goodness is that Zambians know that Childish wants to sell but Privatisation was enough. They know once bitten twice shy.
    • Jay Jay
      AKASHAMBATWA - Please don't mention that evil white devil Reagan...he was the utopia of evil, fake drug wars linked crack cocaine flooding in black communities, wars in Africa...how dare you mention that vile man!!
    • THE PRINCE
      This ditch Lungu is digging for us will be so deep that we will fail to come Out. Zambians let’s face it?? What would we wish for such leadership? Our Leaders are in denial instead of accepting the mistakes so that we jointly find solutions. We are messed up.
  2. Frog
    Sven is not struggling to explain Only people who don't understand sports don't understand his explaining . It's for the first time after long period Chipolopolo played. They didn't not have any friendly match prior to the match against Namibia. The coach that was his first match. What do you expect, a win? The coach needs about three or four friendly matches to understand his players.
  3. Sena
    The so called Jews in the US Senate hate Africans because they know Africans are real Hebrews God's people unlike them fake Jews. How can Europeans be Jews? That's why Hitler put them in gas Chambers because of lying that they are the Hebrews of the Bible. There were no white people in the Bible.
    • Spaka
      Black people and the bible ,?? It's too much....as kenyatta said, the white man brought the bible , told us to close our eyes and pray, when we opened our eyes we were left holding the bible and the whites had all the land......
    • Maganizo
      Such warped thought process is even allowed to come out of one’s head will remain a mystery. You are no different from Hitler. Africans must take responsibility of their own incompetence
    • JourneyMan
      @sena. Wow! where did you get that nonsense from? Just some advice; if you are ignorant, it's better to keep quiet. The bible says "even the fool seems wise when he keeps vsilent...". Not saying you are a fool. But to be honest, I am almost inclined to conclude that you are an uneducated PF cadre who has been given a job in foreign service, but I will give you the benefit of doubt.
    • Duda
      This is looking good in my view. After the cold war between the West and East came to an end with the West winning without doubt. African became irrelevant. Now with this, we're suddenly relevant again. If you see emotions going high in then US Senate, just know the game is good for us.
  4. Ndanje Khakis
    Personally I don't think this is to do with Chinese loans but a battle between USA and China. Trump is all out to "finish off" China. In addition Trump has withdrawn all financial aid to Palestinians including medical aid. It's time people started looking at solutions from within.
  5. Spaka
    Trump is trashing all world trade accords and world trade dispute resolution mechanisms......expect China to have no recourse to claim the billions they are pouring into Africa. One school of thought is of the conviction that the african leaders the Chinese are bribing to stay in power so that , they the Chinese, continue looting Africa will fail to deliver higher standards of living to an expectant population who will see all this infrastructure but will still wallow in poverty. The debts will make this poverty worse. The West has calculated that the Chinese will lose out in africa as they will be driven out by the tax stressed over burdened locals. #spaka, most influential blogger.
  6. Titus Musankwa
    The Americans are just jealous that African countries have found a sugar daddy that still allows the countries to go out at night and do as they please. When America was the sugar daddy he gave he gave money to his Slay Queens (African countries) with so many conditions.
    • Ndanje Khakis
      Yesterday John Kerry former USA Secretary of was on CNN. Among the things he said was that the USA was technologically lagging behind China giving an example of the Chinese train which can travel at 300 km per hour while the USA version can only do 150 km per hour and this just for a short distance. Trump is paranoid and it's possible his behavior may endanger lives of Africans living in Europe. This can be certified by the increase in the increase of governments which are anti African.
    • Spaka
      One of the conditions for western money is the democracy you enjoy, the chinese will support and fund any despotic dictator with bribes to brutalise his people and perpetuate misrule and corruption..
    • Ndanje Khakis
      Ba Spaka ikalenifye please. I'm sure as you're ready to compare what you call misrule to what you call western democracy you should also compare how leaders in Western Countries opposition do after losing an election to HH who has lost 6 times. They resign.
  7. Napthali
    Its a con-drum really the best option is to fund the bailout set a cap and avoid a spiral because either way these countries are already lock in and the best terms to restructure their macroeconomic should be forged now and IMF has a play in it otherwise further vacuum and potential space is handed to China to further exploit the rare commodities and routes arming itself in the global economic and political space You cannot simply sit and do nothing for these already distressed economies under the mighty China in potential funding and opportunities Its not going to work it eventually comes back to you If you contribute once the USD I64 billion Dollars to IMF and...
  8. Nothing ever changes
    This can't be like "headline news" today in zambia. This is old. Look at the date on that cheap letter. Ba upnd are really desperate for power. Everyday we wake up in zambia its about "debt defaulting" "IMF" "China" "Selling this of that". What am seeing is that PF are now tasting the same pill they gave Rupia when they wanted power. We used to hear that rupia is visiting zambia, he spends mo time outside the country. We were told rupia carries so many millions of Dollars everytime he leaves the country to go & stach. Today pf is on the back foot, dealing with similar tactics. Tiyeni nayo. This might just break pf even if these allegations are not true. Opposition has shifted from "drunkard, corruption" to the new one about "Chinese, debt, zesco, kk airport, imf". All...
  9. Napthali
    and restructure these economies to prevent the eminent,then you have lost to China The recommendation by the senator is only complete if the QUESTIONS asked in the letter are complete otherwise funding to refinance the Chinese loans is the best option to avoid already global trends You will not be arming the Chinese by funding in short term but better in the short term and never arming them in the long-term and fell to restructure than the current global economic scenarios trending and create a portfolio of well diversified funding methods and markets to promote equity and allocation of global resources China is eventually the best winner if the recommendation are not answered...
  10. Napthali
    But the best country to emerge must be on top of the the Two China and IMF whatever engagements and look further but diversifying on funding and trades is also important Know yourself first before you go to the table
  11. Napthali
    "Ethiopia became the first country on the continent to have its Chinese debts restructured even as it became apparent that several other countries were waiting for loan concessions to avert distress. On Thursday, Ethiopia announced that China had agreed to restructure some of its loans, including the one for the $4 billion railway linking its capital Addis Ababa with Djibouti.Prime Minister Abiy Ahmed said the loans would be restructured, with a further 20-year extension, which will see its annual repayments come down to an affordable level.It is understood that Djibouti could also be on the way to enjoying reprieve, given that its debts from Beijing were already choking it.The country has seen its debt to GDP ratio raise 88 per cent, the latest report from Centre for Global Development...
  12. Napthali
    shows, even as it ramps up its port infrastructure investment already running into billions of dollars." The softness of these financing by china and opportunities presented affords IMF not to sit and watch if it will be a fund to come looking at the decisions of the Chinese Its like a grand master rewriting the global trade and financial system IMF cannot simply sit and do nothing Its Zero Sum Game Its understood Napyamo
  13. Mufuchani Bridgestone
    The move by the senators is good. Why blame the Jews for your leaders f00lish decisions and corruption? Why should American money be used to pay for your corrupt leaders debt in China? Turkey's port is now 65% controlled by China. Lunguand PF are selling Zambia to China. Two people killed by the Chinese. In 10 years time the China man will be so strong that Zambians will be slaves to China. China will control KKI airport, Zesco and Ideni to mention but a few.
  14. Harold Muna
    @Nothing ever changes .... What have those letters to do with UPND? I can see comments above that have not aligned themselves with any party. The assumption that anyone who opposes government policy must be from the opposition party, is petty and retrogressive. Of course some bloggers will openly state that they support someone or hate another - that's their choice, but it's always good to state why, or offer constructive responses or opinions whichever is the case. The date on the letter above is 3rd August 2018, by the way. That is not old news, considering the matters raised are ongoing.
  15. Napthali
    "Apple prices may increase because of the massive Tariffs we may be imposing on China - but there is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the United States instead of China. Start building new plants now. Exciting" Zambia should also demand for China to shift its Plants here for copper cobalt or other or act like President Trump there tweeting and make more than 20 Billion dollars in excess of these small refinancing as opposed to sending all rare commodities to china and China to the US that is the Concern okay Its business and my country welfare Food on the table for my people in short
  16. bob marley
    Bah Humbug ! The USA has over 21 trillion in debt today. They will never repay these loans. google US debtclock and be amazed. It comes from nothing and goes to nothing, therefore nothing is lost. Donnot fret good Zambians...
    • Spaka
      Google also USA manufacturing power and Zambias manufacturing power.... If an elephant can cross a deep river , don't think that because it is an animal , so can a donkey , which is also an animal cross the same deep river.....
    • Spaka
      Google also USA manufacturing power and Zambias manufacturing power…. If an elephant can cross a deep river , don’t think that because it is an animal , so can a donkey , which is also an animal cross the same deep river…..
    • Fan
      America patali mudala.Even China will never surpass them. Remember their currency is the most widely used in the world. They can simply print their money and clear off all their debts. American companies are able to make millions and billions within their country unlike other countries including China which have to export to grow their economies
    • Nzelu
      Fan China has been here longer than Europe, even in the end times in the Bible China is mentioned. Guess of the two which country is not mentioned? God is the one that smooths things out my friend.
  17. Spaka
    The Chinese mantra of aid without interference in internal politics is interpreted in the west as " bribing and funding any despot to cling to power to help facilitate China's looting regardless of assaults on citizens democratic rights " The west attachers democratic credentials to most money they borrow. They sowed the seeds of democracy in Africa. When the corrupt despots funded by China to stay in power fail to deliver better living standards , that little democracy planted by the west will drive the Chinese from Africa by way of people power.....Unless the Chinese are ready to be dishing free bailouts to these despots for the foreseeable future.. #spaka, most influential blogger.
  18. Spaka
    The Chinese mantra of aid without interference in internal politics is interpreted in the west as ” bribing and funding any despot to cling to power to help facilitate China’s looting regardless of assaults on citizens democratic rights ” The west attachers democratic credentials to most money they borrow. They sowed the seeds of democracy in Africa. When the corrupt despots funded by China to stay in power fail to deliver better living standards , that little democracy planted by the west will drive the Chinese from Africa by way of people power…..Unless the Chinese are ready to be dishing free bailouts to these despots for the foreseeable future.. #spaka, most influential blogger.
  19. rudemonk
    The USA have seen the Chinese plan of scooping cash from IMF through dubious constructions that are normally triple priced by the corrupt third word leaders like the Zambian leaders leaving their countries in perpetual bondage with the Chinese who will one day say all who owe us cash we are taking over your countries and rule from Beijing and thats what USA does not want to listen to. Imagine the USA embassy under the Chinese microscope in Zambia. Zambia has borrowed far more than it needed. Over 70% of the borrowed cash has gone to service the ever hungry for a cash politicians in the ruling party. Disaster!!!!
  20. Mailo Namailo kakupela
    It is finished! Tasila aLungu! Chagwa agwesa Ziko! Reminds me of PK Chishala's song, "Namusonda" When China gives you loans, it's not that they love you! I've not heard of the Chinese $1.3Billion IMF equivalent of a bail out. What do we have apart from $60million USD? We are allowing ourselves to be traded as Pons because of our own carelessness! Wait until DJT does the unthinkable on US funded programs!
  21. Senior Citizen
    Vision-less politics has led this country to be entangled in a spider web, China is busy draining the sweet fluid from inside and we will keep holding on to an empty shell. IMF is on the terraces enjoying the horror movie, after all state house has openly declared from time to tome that they don't need IMF. Well more pop corns and a soda for IMF.
  22. Napthali
    Looking through and learning from Government and Public Financing You will also discover that actually the Chinese and the Euro subscribers and other Loan Financials including these Global banks and IMF World Bank are same either crossing this side to US or China in supplies and Funding Its therefore imperative that you treat both with ultimate respect caution and always taking a view They are basically the same serving their interests okay That is why when you go to the table negotiate on your own terms not with a guy whose ultility was paid USD 2.5 Billion and the whole africa follows similarly blindly
  23. Napthali
    Its either on the resource side or financing using debt and never heavy on capacity creation in skills and manufacturing
  24. ANYOKO
    ZAMBIA WILL CONTINUE BORROWING UPTO 100% OF THE GDP WE STOP LOOKING TO IMF LETS DEAL WITH CHINA ONLY, EVEN LATER ON CHINESE RUN ZESCO ZNBC KKIA ITS ALL GOOD NEWS FOR BETTER SERVICES AND FACILITIES WILL STILL BE OURS.
  25. Mwiponta Mukabwela
    Never should you be cheated or trust America with their economic policies on African or developing countries. The truth of the matter is that currently America is at trade war with China, because China has become a biggest threat to America interms of economic development in all areas, hence US government has started putting high trade triffs on Chinese imports trading not only in US but global wise. And IMF loans high interest rates has left most countries especially in Africa suffering and still paying on those loans including Zambia. Now today that China has come up with trade and development partnership with almost all countries in the world and offering loans for infrustrature developments to African countries with no interests, American government is not happy with this scenerio...
  26. Napthali
    On the contrary the US is a better longterm well trusted pratner very honest and fair in dealings When you look at the Global trade and FDIs values and interests You will observe tat actually america is a better partner tan Chinese You can see the inclination of these countries America UK Spain China Brasil the EU or other You will realize the USD is a better partner in FDIs support and capacity The Chinese trail and are heavy on trade in commodities It’s not a secret that Africa and Zambia in particular is under the TWO ELEPHANTS Economic foreign policy are being crafted around trade and FDIS emphasising national interests and cultivating spheres of interest...
  27. Napthali
    on which to exercise influence I short term or longer term for the benefit of the interest country or mutual across political structures economic political or as china as discovered soft power Sub Sahara is a victim of the elephants as foreign influence is peddled that will shape politics and economies same as the China and others are competing for influence it’s not a secrete and china has taken a
  28. Napthali
    LEAD BUT THE QUALITY OF THOSE FDIs and Trades should be mutually beneficial to the Country and Investing Country otherwise African countries short of Financing would have preferred t trade with US because of perceition of Chinese Investments which they have to address
  29. Pinto
    The US Senate is just wasting their time. Zambians will go to the Show Grounds on October 18 to fast and pray. They will pray for the economy with Lungu and all will be ok. In Zambia, prayer solves everything, theft, cholera, hunger, bridges, corruption and impotence. We just pray, God stops whatever he was doing to listen to Lungu and his cadres screaming for manna.
  30. Mwelwa
    Wow! I am impressed with some of the postings above. At long last, "some" who were on the wrong side of the fence have finally come to terms with reality. Welcome on board. Its a pity you are opening your eyes when we are already deep in trouble waters.