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Tanzania Least Indebted Country by China in EAC Region


By Staff Writer, Nairobi

Barrowing and expenditure prudence under President John Magufuli of Tanzania has the country; East Africa’s fastest growing economy to be ranked the least indebted country by China among her regional peers. 

The 2019 Ifw Institute for the World Economy report released this week has ranked Tanzania the 43rd less indebted country by China in Africa. Kenya and Uganda have been ranked the 25th and 33rd among 50 countries respectively. According to the report Djibouti is the highly indebted country by China among all the 50 world countries.
    
The report covers a total of 1,974 Chinese loans and 2, 947 Chinese grants to 152 merging or developing countries from 1949 to 2017. The data is granular and was gathered from a variety of sources including international treaties, debt contracts, policy reports, as well as the work of academics such as the AidData team.

According to the report, the Chinese loans have helped to finance large-scale investments in infrastructure, energy and mining in more than 100 developing and emerging market countries, with potentially large positive effects for growth and prosperity

The report indicates that as of 2018, the government of China held more than five trillion USD of debts towards the rest of the world (6% of world GDP), up from less than 500 billion in the early 2000s (1% of world GDP). China’s total financial claims abroad amount to more than 8% of world GDP in 2017.

Moreover, the report states clearly that what has made China such a dominant global creditor in the recent 20 years is the drastic increase of China’s GDP, combined with China’s “Going Global Strategy” to foster Chinese investment abroad, which was initiated in 1999.

For the 50 main recipients of Chinese direct lending, the average stock of debt owed to China has increased from less than 1% of GDP in 2005 to more than 15% of the indebted country GDP in 2017, at least according to lower bound estimates. For these countries, debt to China now accounts for more than 40% of total external debt, on average.

According to the report, the regions that are most indebted to China are Far East Asia and Central Asia, including highly exposed, small economies that are in geographic proximity to China such as Laos, Cambodia and the Kyrgyz Republic. Next come Sub-Saharan Africa and Latin America, as well as some parts of the MENA (Middle East and North Africa) region.

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