The coast of La Digue, one of Seychelles’ largest islands. Seychelles greatly expanded its marine protected areas in exchange for millions in debt relief. Credit: Jean-Marie Hullot, Creative Commons
After rising to become the world’s top bilateral creditor, China is facing a new challenge: a looming global debt crisis. Many of China’s most frequent borrowers now find themselves unable to repay their debts.
China has already shown itself as a willing partner in debt renegotiations. It has joined the G-20 Debt Service Suspension Initiative (DSSI) to ease this burden among 73 lower-income borrowers by allowing them to temporarily suspend their debt payments to participating bilateral lenders. The initiative is currently set to expire in June.
In fact, the DSSI-eligible countries facing the heaviest debt service are all repeat customers of China’s lending. Pakistan — the DSSI-eligible country with the greatest debt service burden — owes China $2.9 billion in debt service in 2021. Kenya and Angola — in second and third place — owe China $2.3 billion and $849 million in 2021, respectively. Laos owes China $442 million in 2021, a whopping 2 percent of its GDP.&
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