China will help member countries of Belt and Road Initiative (BRI) adopt prudent financial management in a bid to diffuse concerns over the ‘debt trap’ facing many of its borrowers in Africa, its finance minister has said.
Speaking Thursday at a forum to kick off a the second Belt and Road Forum (BRF) in Beijing, Liu Kun emphasized that it was crucial for the BRI member countries and China to come up with a framework to handle issues of debt.
“Stable and sustainable finance management is a long term responsibility of BRI and as a ministry we will continue to work with finance ministers of the member countries and other financial institutions like World Bank and International Monetary Fund (IMF) to promote high quality and standard finance system for BRI projects globally,” said Mr Kun.
He added “we plan to build up a debt sustainability framework to prevent and resolve risks as well as deliver on the objectives of the BRI. We have to strike a balance between access to development funds with its debt sustainability.”
Mr Liu also said that Beijing will ensure that all BRI parties adhere to international standards of business and affordability in handling BRI projects.
The announcement comes at a time when western powers accuse China of using the Belt and Road initiative to bid for geopolitical influence.
The three-day Belt and Road summit is being attended by more than 40 heads of state and representatives from more than 150 countries and 90 international organisations.
It will be opened officially tomorrow by Chinese President Xi Jinping.
Speaking at the event, IMF Managing Director Christine Lagarde lauded Beijing for the BRI saying it played a crucial role in infrastructure development.
Ms Lagarde, however, called for transparency and increased financial inclusion to make it more effective.
“We have to go for greater openness in terms of capital flows. Our modern financial landscape reveals enormous potential of better connections between nations and financial institutions across the world. These financial connections guided by the principle of openness, can lead to new constructions, new jobs, opportunities and ultimately, achieve economic security,” said Ms Lagarde.
World Bank Chief Executive Officer Kristalina Georgieva said that low and middle countries needed to spend $2.7 trillion annually up to 2030 to close the infrastructure deficit.
She noted that World Bank has contributed $80 billion in infrastructure projects in developing countries and plans to contribute another $10 billion.