West racheting up pressures on Chinese loans

Aug 17, 2022 Editorial

Kaieteur News – The West has issued a sharp warning to countries in the hunt for cheap loans, which usually fall afoul of crippling terms that leave them vulnerable to foreign pressures. The word from the West is stark: borrow from the Chinese at own risk. To say differently, the West is cautioning: Get caught in lures of sweet on-the-surface Chinese debt, and there will be trouble. All the fine print, those suffocating terms and conditions that trick poor Third World nations in the Chinese debt trap, will now be open to Western eyes, as they probe to determine what to do next. This, too, is a new form of enslavement for impoverished Third World countries in Africa, Asia, and this region, with the latest being Sri Lanka and Pakistan standing as countries reduced to begging for relief from any source.

The West is applying the squeeze in a series of swarming moves against the Chinese now clearly its main challenger and competitor for influence and dominance on the world stage. When we say the West, it is less of decision makers in Europe, and more of leaders in Washington, who dictate how these things unfurl. Frankly, Western lenders are not much better in the hellish terms that they apply to sovereign borrowers who binged on debt, and ended up with bad credit. Big debt hangover, and a bad record of repaying, even defaulting, on loans inevitably lead to the poor reputation of a bad borrower. In such circumstances, the International Monetary Fund (IMF) is turned to as a lender of last resort. Countries recoil from having to deal with the IMF, for it has gained a well-earned name as a Mafia institution.

But borrowers are beggars, and beggars can’t be choosers. The IMF gets the right to be a chooser, relative to those countries that it will lend to, those that it puts in a headlock. The IMF also gets to choose what records it asks for, how deep it decides to drill down, which is exactly what commercial banks do when lending money to citizens and companies. Antennas go up, and scrutiny tightens cruelly when there is already a heavy loan overload. Western lenders, with the IMF leading, are insisting on more disclosures about the debt deals they did with China, from those countries that turn up at their doors begging.

Pakistan, which was already weighed down with Chinese loans, had to disclose the additional details identified by the IMF, as part of the consideration for a US$6B loan that it was seeking to avoid a debt crisis. It is called ‘debt transparency’ and the entire debt exposure of a nation down on its knees begging the IMF (and other Western lenders) has to be put on the table. This is the level of humiliation that leaders of sovereign nations have to face, where all their dirty debt linen is placed before cold-blooded western bankers. It is the hard price for bingeing on debt, and allowing themselves to be suckered in what looked so alluring, only for those billions in loans to end up being monstrous yokes hanging around the necks of suffering countries led into debt swamps by criminally irresponsible leaders.

As we examine the newer, tougher standards of Western-based lenders, our thoughts are close to home. The Coalition APNU+AFC did its share of borrowing, but when compared to its borrowings, the returning PPP/C Government has been on a debt rampage, in an unholy rush to borrow billions from any lender from any place. It looks like leaders in the PPP/C Government harbour some fear that loans will be scarce to come by, so they race to stock up on debt. Guyana is in a debt hole of its own making already. Our leaders must slow down the borrowing, weigh which projects should be done, those that could wait for a little while. This hustling towards more debt must cease immediately; the thinking of debt as a front for frauds must be guarded against, and overcome. Debts shackle citizens tighter, expose them, and we hope that the resolve of leaders in the PPP/C Government, is that enough debt horrors have been piled upon them already. Be done now with so much debt.