Yellow taxi cabs drive down a road in Senegal’s capital city of Dakar on Sept. 6, 2023.
John Wessels | Afp | Getty Images
BEIJING — An ambassador of an African country to China has criticized the International Monetary Fund and the World Bank for their restrictive lending policies.
“The problem is that the ratings we are making for the African [countries] should be different,” said Ibrahima Sory Sylla, ambassador for the West African country of Senegal, during an event at Peking University.
Sylla argued that the ratings provided by Fitch or Standard and Poor’s do not consider local factors such as food security, which are essential for assessing economic sustainability. However, these ratings serve as the basis for IMF and World Bank assessments.
A Reuters report in December revealed a significant increase in the number of people experiencing food shortages in West and East Africa. Senegal responded to this by increasing its borrowing from China, as noted in the Chinese Loans to Africa database managed by Boston University’s Global Development Policy Center.
While West African countries saw an increase in borrowing activity, other parts of Africa showed a more muted growth trend, according to the data.
“What we can understand is that many multilateral development banks, through the G20 debt suspension initiative, require countries to participate. However, once they do, their risk ratings are downgraded,” Sylla explained. “In contrast, developed Western countries can have a debt-to-GDP ratio exceeding 200% without being downgraded.”
CNBC reached out to the IMF, World Bank, and S&P for comment but didn’t receive an immediate response. Fitch Ratings stated that its sovereign rating decisions are based on consistent and publicly available criteria.
“I cannot deny that the financing cooperation between China and Africa are facing some challenges or difficulties due to the default of some countries…
Wu Peng
China’s foreign ministry, African affairs
Jang Ping Thia, lead economist and manager of the economics department at the Asian Infrastructure Investment Bank, expressed his belief that IMF and World Bank officials sincerely believe in their debt sustainability framework and its benefits for countries.
Thia also mentioned his recent trip to Africa, where he witnessed the construction of a new city by Chinese contractors with low occupancy rates. He emphasized the importance of proper timing, debt management, and absorption capacity for infrastructure projects.
Belt and Road Forum
These discussions on Chinese financing in Africa coincided with the upcoming Belt and Road forum, an event centered on China’s regional infrastructure development initiative. Russian President Vladimir Putin is scheduled to attend the forum, which will take place in Beijing on Tuesday and Wednesday.
Critics argue that the Belt and Road Initiative allows China to expand its global influence while burdening poor countries with debt. A report by Peking University’s Institute of New Structural Economics revealed that China loaned $160 billion to African countries from 2000 to 2020, resulting in increased African economic growth.
Allan Joseph Chintedza, ambassador of Malawi to China, emphasized the need to consider the repayment period for Chinese loans in the report. He highlighted the importance of addressing key issues to ensure the success of the Belt and Road Initiative.
Malawi, for example, requires a sustainability letter from the Chinese government to borrow more from the IMF. Chintedza noted the challenges faced in trying to raise funds and repay debts.
Wu Peng, director-general for the department of African affairs at China’s foreign ministry, acknowledged the challenges faced in China-Africa financing cooperation but expressed confidence in future collaboration. He mentioned ongoing discussions with Chinese banks regarding railway projects in Western Africa.
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