BRI partner countries are increasingly opting for bailouts from IMF

BRI countries are increasingly opting for bailouts from the International Monetary Fund (IMF), even though they often come with tough conditions, rather than trying to negotiate further relief from Beijing, wrote Michael Bennon and Francis Fukuyama in a recent article in Foreign Affairs.

Bennon is a Research Scholar and Manager of the Global Infrastructure Policy Research Initiative at the Center on Democracy, Development, and the Rule of Law at the Freeman Spogli Institute for International Studies at Stanford University.

Fukuyama is Olivier Nomellini Senior Fellow at the Freeman Spogli Institute for International Studies and Director of the Ford Dorsey Master's in International Policy at Stanford University.

Among the countries that the IMF has intervened to support in recent years are Sri Lanka ($1.5 billion in 2016), Argentina ($57 billion in 2018), Ethiopia ($2.9 billion in 2019), Pakistan ($6 billion in 2019), Ecuador ($6.5 billion in 2020), Kenya ($2.3 billion in 2021), Suriname ($688 million in 2021), Argentina again ($44 billion in 2022), Zambia ($1.3 billion in 2022), Sri Lanka again ($2.9 billion in 2023), and Bangladesh ($3.3 billion in 2023).

Some of these countries resumed servicing their BRI debts soon after the new IMF credit facilities were put in place. In early 2021, for instance, Kenya sought to negotiate a delay in interest payments for a struggling Chinese-funded railway project linking Nairobi to Kenya's Indian Ocean port in Mombasa.

After the IMF approved a $2.3 billion credit facility that April, however, Beijing began withholding payments to contractors on other Chinese-financed projects in Kenya.

As a result, Kenyan subcontractors and suppliers stopped receiving payments.

Later that year, Kenya announced that it would no longer seek an extension of debt relief from China and made a $761 million debt service payment for the railway project, the article said.

Some analysts have argued that the BRI is not a cause of the current debt crisis in emerging markets.