Bangladesh FM Mustafa Kamal urges developing nations to be wary of Chinese loans under BRI

Bangladesh's Finance Minister AHM Mustafa Kamal has issued a warning to developing nations about the risks of taking additional loans through China's Belt and Road (BRI) Initiative as the pressure on heavily indebted emerging markets is increasing due to global inflation and sluggish growth. He also stated that China needed to be more stringent in assessing its loans amid concerns that poor lending decisions run the risk of driving nations into a debt crisis. Kamal also cited the example of Sri Lanka, where infrastructure projects sponsored by China failed to produce returns, which has led to a catastrophic economic crisis in the island nation. 

"Whatever the situation that is going on worldwide, everybody will be thinking twice to agree to this project (BRI). Everybody is blaming China and it cannot disagree. It's their responsibility," the Bangladeshi minister stated in an interview with the Financial Times.

He claimed that China has not been cautious enough in selecting which projects to support, which is clear from the ongoing crisis in Sri Lanka. Kamal also advised China to do "comprehensive research" before lending to a project. 

In July, Bangladesh became the Asian nation to request financial assistance from the International Monetary Fund (IMF) as skyrocketing prices of the commodity have put pressure on its foreign reserves. According to reports, Bangladesh, which is a BRI participant, owes Beijing $4 billion, or 6% of its entire foreign debt. According to Kamal, Bangladesh requested the first installment of $1.5 billion from the IMF as part of a $4.5 billion package that would also include funds to support its budget and help it finance programmes to help the country adapt to climate change. 

Bangladesh seeks up to $4 billion in funds from various global lenders

The Bangladeshi Finance Minister further stated that the country has also sought up to $4 billion in funds from various other multilateral and bilateral lenders, such as the World Bank, Asian Development Bank, Asian Infrastructure Investment Bank, and Japan International Cooperation Agency. He also expressed optimism about the nation's ability to obtain loans from them.

"Everybody is suffering and we're also under pressure. Bangladesh is not at risk of defaulting like Sri Lanka. There is no way to even think of a situation like that," minister Kamal told the British daily. 

IMF to contribute to climate change-related projects of Bangladesh

In a statement, the IMF noted that its new "Resilience and Sustainability Trust" would contribute to long-term financing for climate change-related projects as part of Bangladesh's loan programme. "Unprecedented global shocks present countries like Bangladesh with significant uncertainties," the UN financial body stated. In recent decades, Bangladesh's economy experienced remarkable growth, going from being among the poorest in the region to having a per capita income of $2,500. However, the low-lying nation of 160 million faces a serious threat from climate change, making it susceptible to flooding, unpredictable monsoon rains, and increasing sea levels.

Image: Facebook/AHM Mustafa Kamal/AP