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Tuesday, 13 December 2011

Debt Watch (China), 4th Edition

The Government has entered into yet another debt deal with China. This week Alexander Chikwanda received an economic and technical cooperation grant agreement (free money) amounting to US$7m and then proceeded to borrow US$10m on top. We are told the the money will be used "in the fight against poverty and projects to be agreed upon by the two governments". So we are borrowing money that we do not even know where its going to be used? One assumes that China would have been content just to give the US$7m without lending the extra. 

Mr Chikwanda was also keen to reiterate that it is "Government’s desire to access Chinese financial assistance and technical expertise to extend the TAZARA railway line project to Angola".
 So more debt coming.  The problems with all of these loans (small or large) is that they are just arbitrary and without any clear audit trails. Our hope (faint) is that Mr Chikwanda will slow down a bit and put his thinking cap on.  It does not not make sense to keep on borrowing without a proper debt management strategy underpinned by appropriate legislation. Its my view that until that is done there should be no more borrowing, big or small.

Related Posts:

Debt Watch (China), 3rd Edition
Debt Watch (China), 2nd Edition
Debt Watch (China)

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