IMF, World Bank urge caution with China loans

The rising influence of lending by China to developing nations is increasingly under the spotlight amid concerns the growing debt burden and onerous conditions could sow the seeds of a crisis.

The global development lenders, the International Monetary Fund and World Bank, are calling for more transparency about loan amounts and terms, and cautioning governments against relying too much on debt.

At the Spring meetings of the institutions on Thursday, newly-installed World Bank President David Malpass warned that "17 African countries are already at high risk of debt distress, and that number is just growing as the new contracts come in and aren't sufficiently transparent."
And Lagarde said, "It's clear that any debt restructuring programs going forward in the years to come will be more complicated than debt restructuring programs that were conducted 10 years ago, simply because of the multiplicity of lenders, and the fact that not all public debt is offered by members of the Paris Club."
Malpass acknowledged that lending can help economies grow "but if it's not done in a transparent way, with good outcome from the build-up of debt, then you end up having it be a drag on economies."
He cautioned that "history is full of those situations where too much debt dragged down economies."
"This is critical for poor countries as they try to move forward to have the projects associated with good quality programs and full disclosure of the debt."