Chinese loans to Latin America are drying up

After years of lending billions of dollars to the region, China stopped lending to Latin America in 2020.

It was the first time since 2006 that China had not granted any new loans to any country in the region, underscoring the concern of foreign banks over the current state of the Latin American economy.

New data from a joint report by the think tank Inter-American Dialogue and Boston University shows the sudden decline in credit given to the region after years of access to a steady financial flow from China.

From 2015 to 2019, Chinese banks provided loans worth $ 43.5 billion to countries in Latin America and the Caribbean, mainly on infrastructure projects such as highways and ports, as well than on energy and mining projects.

The China Development Bank (CDB) and the Import-Export Bank of China, the country’s two main government banks, are the two entities that provide most of the loans. Since 2005, China has extended a loan of 136 billion dollars.

“With the region facing unprecedented challenges, China is unlikely to lend more at this time,” Margaret Myers, co-author of the report, told The Associated Press. “Instead, he needs to tackle his own problematic wallet.”

Although no additional loans were made last year, China is still the region’s main trading partner and has significantly overtaken the United States in this department. Chinese lucrative donations to Latin American governments are also common. China has donated hundreds of millions of dollars in medical equipment to fight COVID-19, but also regularly distributes other supplies like police equipment.

Several countries – including Brazil, Mexico and Argentina – also have access to China’s Sinovac vaccine, although a trial in Brazil showed it was only effective 50 percent of the time.

As Latin America expects to experience a recession of around 8% of its total GDP due to the coronavirus pandemic, it will be all the more difficult for countries to repay some long-standing debts to China . Ecuador, for example, has already had to restructure its debt and defer nearly $ 1 billion in payments to China until the end of this year.

“The debt crisis linked to Covid-19 has probably sparked some introspection among major Chinese lenders, especially as they are struggling with the prospect of a widespread loan default,” wrote the authors of the report.

Source link

About Matthew Berkey

Check Also

GFANZ does not keep its promises at COP26

Canals : COP, Stranded Assets Companies: Rockefeller Brothers Fund People: Michael northrop November 16, 2021 …

Leave a Reply

Your email address will not be published. Required fields are marked *