Interesting FT story, drawing on the amazing AidData numbers.
But I suspect it misses something important -- namely, China seems to be having second thoughts about its "emergency lending."
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ft.com
But I suspect it misses something important -- namely, China seems to be having second thoughts about its "emergency lending."
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ft.com
There is no doubt that the ~ $2b in CDB lending for budget and BoP support allowed Sri Lanka to avoid going to the IMF in 2021 and 2022.
But it also hasn't worked out well for China. Sri Lanka isn't in any better position to repay China's legacy project loans.
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But it also hasn't worked out well for China. Sri Lanka isn't in any better position to repay China's legacy project loans.
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And the PBOC didn't allow Sri Lanka's central bank to use its swap line earlier this year, forcing Sri Lanka to go to the IMF ...
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It doesn't appear like the PBOC has allowed substantial use of Argentina's swap either -- the swap continues to largely just sit on the BCRA's balance sheet. Hence Argentina's continued shortage of (usable) reserves ...
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And Pakistan, which no doubt has received "IMF like" support from China in the past (notably in late 2018), now has an IMF program ...
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So it seems like the latest slug of Chinese funding (over $2 billion from the state banks to Pakistan's central bank) was provided alongside the IMF --
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Obviously this could change, but right now, China looks to be acting a bit more cautiously -- likely, because its initial "emergency" lending packages haven't worked, and its lenders have become more risk adverse.
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Plus there is a question about just how willing the PBOC has been to allow actual use of its swaps in countries under stress.
Drawing on the swap lines to add to stated reserves is one thing. Actually drawing down the CNY balances from the swap appears to be another ...
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Drawing on the swap lines to add to stated reserves is one thing. Actually drawing down the CNY balances from the swap appears to be another ...
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self edit -- the CDB loans allowed Sri Lanka to avoid the IMF in 2020 and 2021. Sri Lanka is obviously now out of funds and negotiating with the IMF
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