The International Monetary Fund’s Christine Lagarde warned Chinese policymakers on Thursday to beware of financing unneeded and unsustainable projects in countries with heavy debt burdens.
Ms Lagarde, the IMF’s managing director, told a conference in Beijing that while China’s Belt and Road Initiative (BRI) could provide much-needed infrastructure, “ventures can also lead to a problematic increase in debt, potentially limiting other spending as debt service rises, and creating balance of payments challenges”.
Beijing’s multibillion-dollar initiative, seen as the underpinning of a new Silk Road linking China to the world, is providing welcome finance to countries from east and central Asia to Europe and Africa for roads and other projects, but it has also been criticised for burdening recipients of the funds with debt.