Country, estimated to be owed up to $1.5trn, is increasing penalties for late payments and cutting back on infrastructure projects
China has become the world’s biggest debt collector, as the money it is owed from developing countries has surged to between $1.1tn (£889bn) and $1.5tn, according to a new report. An estimated 80% of China’s overseas lending portfolio in the global south is now supporting countries in financial distress.
Since 2017, China has been the world’s biggest bilateral lender; its main development banks issued nearly $500bn between 2008 and 2021. While some of this predates the belt and road initiative (BRI), Beijing’s flagship development programme has mobilised much of the investment in developing countries.
But a new report by researchers at the AidData research lab at William & Mary, a public university in Virginia, found that China, the world’s second largest economy, is now navigating the role of international debt collector as well as being a bilateral funder of major infrastructure projects.
I mean I guess but the imf charges 2% interest on loans. China charges 5%
@zepheriths the trouble with the IMF is it requires very specific economic restructuring that tends to lower social spending on things like health.
For many years NGO doctors nicknamed it the Infant Mortality Fund for this reason.
And this has subsequently been backed up by research which found that yes, a rise in infant mortality really does follow an IMF loan, even when you control for other factors.
So basically which would you rather: children in your country die now, or your railway gets reposessed later?
@FMT99
(Example of research = Globalization and health equity: The impact of structural adjustment programs on developing countries)
You will see a lot of bad outcomes following an IMF intervention for the same reason you will see a lot of bad outcomes following oncology visits. Once you’ve gotten to the point the IMF get involved, things are already going to hell. What do you believe the effect on infant mortality of bankruptcy to be?
@hanekam that’s the conclusion you would jump to if you’re not familiar with the actual research, but this is why I mentioned that they control for other factors.
I’m not ignorant, I know correlation doesn’t equal causation. But the fact that the actual conditions of IMF loans drive specific negative social outcomes has been well-established.
Here are a couple of starting points:
The impact of IMF conditionality on government health expenditure: A cross-national analysis of 16 West African nations
International Monetary Fund Programs and Tuberculosis Outcomes in Post-Communist Countries
I’ve looked at all of the sources you provide, and they all point out the fact that countries experience bad outsomes after an IMF intervention, which nobody’s disputed. My argument is that countries in similar dire straights will experience even worse outcomes if there is no such intervention. As an example, I could name Venezuela, which experienced an extreme increase in child mortality, your favored metric, after leaving the IMF. The root cause is economic distress, not the IMF intervention.
Minimizing the negative effects of government failure is absolutely worth examining. Identifying the mistakes made by the IMF in past interventions is a noble goal. But we should not blame international organizations when poor governance causes countries to fail.
I understand your argument but it doesn’t really apply. With all due respect I don’t think you can have looked at my links very well.
The TB one for instance found that TB gets worse whenever there is an IMF loan but not in the same circumstances when there is a loan from somewhere else.
You don’t seem to realize that IMF loan conditions have very specific governance requirements which directly impact governmental decisions around health spending.
These are called Structural Adjustment Programs.
There have been a bunch of these types of finding. Like I said, it’s well known in NGO circles.
There is a reason China’s loans are so popular. I think being able to govern your health system as you see fit is a much more compelling reason for choosing a particular loan style, than some vague ideological mumbo jumbo.
Yes, because the countries taking those loans aren’t distressed.
They are popular because they come with very little oversight. Countries with higher transparency do not find them very appealing, as Italy’s recent withdrawal from the program attests.
They come with very specific governance requirements which impact governmental decisions about a whole host of things, because those governments have proven incapable of sound fiscal management.
Again, the IMF is in no way perfect and I’m sure there is a myriad ways the conditions of their loans can be tailored to minimize negative outcomes. But that does not mean they cause these problems any more than every cancer death being a failure of medicine means doctors cause cancer.