Beware of China's debt trap! Bangladesh Finance Minister warns world nations to rethink loans taken from Beijing

Dhaka, Aug 10: Warning developing countries of taking loans from China through its Belt and Road Initiative (BRI), Bangladesh Finance Minister Mustafa Kamal said that the nations must think twice about these loans as Beijing's poor lending decisions risk pushing these nations into debt distress. He also cautioned Beijing on following a more robust process for evaluating its loans.

 

 

 

 

According to Bangladesh's media reports, Bangladesh Finance Minister Mustafa Kamal cautioned Beijing on following a more robust process for evaluating its loans and noted that these kinds of bad loans add strains on indebted emerging markets. It needs to "make a thorough study" before lending to a project, he said. Kamal added, "Whichever projects are essential and are in process and will pay off as fast as possible, we're only taking care of those." He continued saying, "To other projects, we're saying, no thank you."

 

 

 

 

 

Bangladeshi Finance Minister while talking to media, pointed out at the ongoing economic situation in Sri Lanka. Notably, Chinese-backed white elephant infrastructure projects (that failed to generate returns) had perpetuated a severe economic crisis. While referring to BRI, the Minister said, "Whatever the situation [that] is going on worldwide, everybody will be thinking twice to agree to this project," he said in an interview. "Everybody is blaming China. China cannot disagree. It's their responsibility."

 

He said, "After Sri Lanka, we felt that Chinese authorities are not taking care of this particular aspect, which is very, very important." Bangladesh is also a participant in China's BRI and currently, Dhaka owes about USD 4 billion, or 6 per cent of its total foreign debt, to Beijing. Kamal's comments came as China's foreign minister Wang Yi visited Bangladesh over the weekend for meetings with officials including Prime Minister Sheikh Hasina. In a statement, China called itself "Bangladesh's most reliable long-term strategic partner" and said the pair agreed to strengthen "co-operation in infrastructure."