United States of America (U.S.A)has warned African Countries to be cautious of their debt encumbrances. U.S Assistant Secretary of State for African Affairs, Tibor Nagy on Monday said African countries accumulating debts should not expect to be bailed out by western sponsored debt relief.
He made the assertion in Pretoria, South saying a lot of African Countries in the last 20 years have enjoyed big debt forgiveness. He added that the Donald Trump Administration will not be sympathetic towards countries with debt burdens, though the Heavily Indebted Poor Countries (HIPC) Initiative was created to help poor countries clear their debts.
"The International Monetary Fund and World Bank began the Heavily Indebted Poor Countries (HIPC) Initiative in 1996 to help the world’s poorest countries clear billions of dollars worth of unsustainable debt," the top diplomat said.
Also, a report by the International Monetary Fund (IMF) revealed that Africa faces a high potential debt crisis, as 40 percent of countries are low-income and currently in debt distress.
The Donald Trump Administration has disagreed with China for encouraging poorer countries to adopt debt systems with lending for large-scale infrastructure projects.
Nagy went on to say Sri Lanka formally handed over commercial activities in its main southern port in the town of Hambantota to a Chinese company in 2017 as part of a plan to convert $6 billion (£4.7 billion) of loans that Sri Lanka owes China into equity, according to Reuters.
According to the Africa-China Research Initiative at John Hopkins University School of Advanced International Studies, China has between 2000 to 2016 loaned about $125 billion to Africa.
