An article by Barney Jopson in the 9 February issue of the Financial Times, also picked up by International Rivers, reports that Western donors have announced they will cancel a planned debt relief package of $11bn to Congo-Kinshasa if it accepts a $6 billion financing package from a consortium of state-owned Chinese companies to build roads, railways, hospitals and universities in return for the right to develop a copper and cobalt mine. This would be the largest Chinese investment project in Africa to date, according to the article.
The IMF has talked about making governments ineligible for debt relief and concessionary loans if they also accept commercial loans (which typically come from China), as that threatens to create new indebtedness. But this seems to be the first time it is threatening to apply that principle.
Most western donors have said they support the [Chinese] deal “in principle” because it gives Congo access to capital on a scale it could not receive from anywhere else. But, led by the Paris Club of creditors and the IMF, they have raised objections to specific provisions.
The focus of concern, according to western diplomats in Kinshasa, is that the deal would give the Chinese consortium unprecedented state financial guarantees, including some that earmark government revenues and make China a privileged creditor. But Wu Zexian, China’s ambassador to Congo, indicated that it would not be so easy. “They [western institutions] are wrong to ask Congo to remove the state guarantee. That is blackmail,” he said. “This is a poor country that needs to develop. Why force the country to modify the clause?
“We cannot accept that. It’s discriminatory.”
To my knowledge, this is the first public “clash of developments” between Western donors and China. It is interesting that the IMF is not demanding that Congo renounce the deal, only that it renegotiate it; unfortunately the article does not have the details. Many Africa specialists have commented that African governments typically want to keep both Chinese and Western lenders and companies in the game and play them out against each other to get the best conditions.
Asked what lessons the rest of Africa could draw from Congo’s experience with China, Mr Kasongo [the deputy minister of mines] added: “Nobody should go it alone. We are the first ones to leave the door open to both of them [China and western institutions] because they are both servicing us.”
I am very interested to see how this plays out and how the Chinese p[ress reports on it.