30 November 2021, Tuesday, 9:17
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Study: Lukashenka Regime Has "Hidden Debt" To China

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Study: Lukashenka Regime Has "Hidden Debt" To China

It amounts to billions of dollars.

Many countries participating in the project "One Belt, One Road" have accumulated a debt to China that exceeds 10% of their GDP. At the same time a part of the state debt has stayed in the shadow. All this also concerns Belarus.

These findings are contained in the study of the American analytical company AidData.

As the researchers found out, China changed its strategy of foreign lending within the framework of the project "One Belt, One Road", which was launched in 2013. Funding was allocated mainly to countries with low levels of creditworthiness and high levels of corruption according to international ratings. Lending to such countries is considered risky in international practice.

In the framework of the "One Belt, One Road" program, China preferred to allocate funding not directly to the government, but to commercial (state or private) structures. At the same time, when signing the agreement, the Chinese side required either direct or indirect guarantees from the government on the repayment of the debt.

Such debt was not always reflected in government balance sheets. It was not taken into account by the rating agencies. Nevertheless, in fact, it increased the risk of debt crisis in low- and middle-income countries.

Belarus was an important player in the "One Belt, One Road" program during the period from 2013 to 2017, which the study covers.

Our country is among the top 10 countries in terms of the number of projects and the amount of investment in them. Our researchers counted 35 projects under implementation, for which China spent $6.1 billion.

However, by the total amount of loans received from China, we take a modest place. Belarus has borrowed a total of $6.73 billion, whereas Russia, for example, has borrowed $151.8 billion and Venezuela - $81.9 billion.

Participation in the "One Belt, One Road" program had a strong impact on the debt burden of participating countries, AidData experts emphasize. They have counted 38 countries, whose level of sovereign debt to China exceeds 10% of GDP. Belarus is among these countries.

According to the study, Belarus' debt to China amounted to $7.5 billion for the entire period of cooperation, i.e. 14% of GDP. Belarus has also a "hidden" debt, which is not considered in the amount of sovereign debt - $481 million, or 1% of GDP.

However, AidData will re-check the data on Belarus and several other countries for the next edition of its study, as the amount of sovereign debt, which they have calculated, is lower than that of the World Bank.

It should be noted that, according to the Ministry of Finance, Belarus received $14.9 million from the Export-Import Bank of China for the first nine months of 2021 and repaid $403.1 million of the debt to Chinese banks.