China Eximbank suspends debt service payments on government concessional loans in 2020 (Linked to Project ID#92550 and ID#88213)

In response to the COVID-19 pandemic and the G20 Finance Ministers and Central Bank Governors meeting that took place on April 15, 2020 and on November 13, 2020, the Chinese Government agreed to work with other G20 members to implement the Debt Service Suspension Initiative (DSSI). Then, on July 13, 2020, China Eximbank and the Government of Cameroon signed a debt suspension agreement. Under the terms of the agreement, the lender agreed to suspend principal and interest payments due during the April 30, 2020 to December 31, 2020 period under multiple preferential buyer’s credit (PBC) agreements (captured via Project ID#92550) and multiple government concessional loan (GCL) agreements (captured via Project ID#92551). The total estimated suspension amount under the PBCs was $32,911,238. The total estimated suspension amount under the GCLs was RMB 83,829,247. However, at the time that the parties signed the debt suspension agreement, they both acknowledged that the total suspension amount would ultimately be determined at the end of the suspension period (since loan disbursements could be made during the suspension period and the lender agreed to suspend the payment of interest accrued on any disbursements during the suspension period). The lender and borrower agreed that the suspension of debt service would be undertaken on a net present value (NPV)-neutral basis. Therefore, the borrower agreed to pay (a) 2% interest accrued on the amount outstanding under the total suspension amount (‘Suspension Interest’) by paying the Suspension Interest on the amount outstanding under the each PBC agreement’s suspension amount, and (b) 2.6% interest accrued on the amount outstanding under the total suspension amount (‘Suspension Interest’) by paying the Suspension Interest on the amount outstanding under the each GCL agreement’s suspension amount. The lender and the borrower agreed that the repayment of the suspension amount for each PBC and GCL agreement would take place during a 4-year repayment period after a 1-year grace period (starting from and including the repayment date/repayment date of principal and interest falling within the suspension period). Under the terms of the debt suspension agreement, the lender and the borrower also agreed that ‘[t]he suspension interest on the amount outstanding under the Suspension Amount concerning each Loan Agreement shall be calculated on the basis of the actual number of days elapsed and a year of 360 days, from and including the Repayment Date/Repayment Date of Principal and Interest falling within the Suspension Period to the date of payment in full of the corresponding Suspension Amount, and shall be paid in arrears on each Interest Payment Date under the corresponding Loan Agreement.’ The borrower also agreed that (1) ‘it shall continue to perform all its obligations […] under the Loan Agreements as supplemented and amended by [the debt suspension agreement]’; (2) ‘it shall use the created fiscal space to increase social, health, or economic spending in response to the COVID-19 crisis […]’ and ‘work closely with the International Financial Institutions who are expected to put in place a monitoring system’; (3) ‘it shall disclose to the Lender all Public Sector Financial Commitments (as defined in the Government Finance Statistics Manual 2014 (GFSM2014)), respecting commercially sensitive information’; and (4) ‘it shall contract no new non-concessional debt during the Suspension Period, other than agreements under the DSSI’. As of December 31, 2020, the amount outstanding under the suspension amount for the PBC agreements was $32,911,238 (CFA 17.7 billion) and the amount outstanding under the suspension amount for the GCL agreements was RMB 83,829,247 (CFA 6.9 billion).

Additional details

1. AidData assumes that the same basic terms and conditions that governed China Eximbank’s DSSI (debt suspension) agreement with other governments also applied to its DSSI agreement that it signed with the Government of Cameroon. Illustrative DSSI agreements can be accessed via https://www.dropbox.com/s/huwa695j3w9hwig/DSSI%20Agreement%20for%20Kyrgyz%20Republic.pdf?dl=0 and https://www.dropbox.com/s/67n1oq44it27kvu/3.%20Debt%20Suspension%20Agreement%20for%20GCL%20Other%20Projects.pdf?dl=0 and https://www.dropbox.com/s/n69i598f0fg7s80/6.%20Debt%20Suspension%20Agreement%20for%20PBC%20C2.pdf?dl=0. 2. In July 2019, China Eximbank and the Government of Cameroon signed a separate debt rescheduling agreement (as captured via Project ID#88213). Under the terms of that agreement, China Eximbank agreed to reschedule 18 loans previously contracted by the Government of Cameroon — with scheduled principal repayments between July 2019 and March 2022 — by allowing the borrower to defer scheduled principal repayments between July 2019 and March 2022 to later dates but without any maturity extensions. The total amount of restructured debt was equivalent CFA 148 billion ($253 million) — or 70% of the loan principal that was scheduled for repayment between July 2019 and March 2022. Under the terms of the agreement, the Government of Cameroon agreed to repay 30% of the loan principal according to the original July 2019-March 2022 schedule (i.e. without any payment deferrals). The lender and the borrower also agreed to cancel the committed but undisbursed loan balances worth approximately CFA 10 billion (for certain loans with disbursement deadlines that had already passed).

Number of official sources

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Number of total sources

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