Narrative
Full Description
Project narrative
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, China Eximbank agreed to work with other G20 members to implement the Debt Service Suspension Initiative (DSSI). As part of DSSI, China’s Ministry of Commerce (MOFCOM) and the Government of Central African Republic signed a debt suspension agreement during calendar year 2020 (most likely between May 2020 and July 2020). Under the terms of the agreement, the lender agreed to suspend principal payments due between May 2020 and December 2020 under one or more interest-free loan agreements. The total estimated suspension amount is $875,000. Under the terms of the debt suspension agreement, the lender and the borrower agreed that (1) ‘it shall continue to perform all its obligations […] under the Loan Agreements as supplemented and amended by [the debt suspension agreement]’; (2) ‘it shall use the created fiscal space to increase social, health, or economic spending in response to the COVID-19 crisis […]’ and ‘work closely with the International Financial Institutions who are expected to put in place a monitoring system’; (3) ‘it shall disclose to the Lender all Public Sector Financial Commitments (as defined in the Government Finance Statistics Manual 2014 (GFSM2014)), respecting commercially sensitive information’; and (4) ‘it shall contract no new non-concessional debt during the Suspension Period, other than agreements under the DSSI’.
Staff comments
1. AidData assumes that the same basic terms and conditions that governed China Eximbank’s DSSI (debt suspension) agreement with other governments also applied to the DSSI agreement that MOFCOM signed with the Government of Central African Republic. Illustrative DSSI agreements can be accessed via https://www.dropbox.com/s/huwa695j3w9hwig/DSSI%20Agreement%20for%20Kyrgyz%20Republic.pdf?dl=0 and https://www.dropbox.com/s/67n1oq44it27kvu/3.%20Debt%20Suspension%20Agreement%20for%20GCL%20Other%20Projects.pdf?dl=0 and https://www.dropbox.com/s/n69i598f0fg7s80/6.%20Debt%20Suspension%20Agreement%20for%20PBC%20C2.pdf?dl=0. 2. The total suspension amount under the 2020 debt suspension agreement is unknown. However, according to the IMF, 'India, China, and Saudi Arabia participated in the G20 Debt Service Suspension Initiative to C.A.R., along with Kuwait for an amount of US$ 3.5 million from May to December 2020’, so for the time being AidData assumes that all four creditors suspended an equal amount of principal and interest ($875,000 each). 3. The specific MOFCOM loan that was subject to the suspension agreement may have been a 2015 loan worth $38,550,389.60 (see https://www.dropbox.com/s/2sw4f7gluxa52fk/DRS%20Official%20Commitments%20from%20China%20Through%202021.xlsx?dl=0). This issue requires further investigation.