China Eximbank provides $1.28 billion of cash flow relief via 3-year debt service payment deferrals

In 2020, China Eximbank agreed to reprofile multiple loan agreements that it had previously signed with the Government of Laos. These debt service payment deferrals lasted for approximately 3 years (2020 and 2022) and provided approximately $1.28 billion of cash flow relief. The International Monetary Fund (IMF) has estimated that deferred principal repayments in 2020 were worth $220 million, deferred principal and interest payments were worth $450 million in 2021, and deferred principal and interest payments were worth $610 million in 2022. AidData has not identified any evidence that maturity extensions or interest rate reductions were provided.

Additional details

1. Given that China Eximbank is the Government of Laos’ largest Chinese creditor by far, AidData assumes for the time being that China Eximbank offered the principal and interest payment deferrals. However, this issue warrants further investigation. 2. According to the World Bank’s International Debt Statistics, the Government of Laos was responsible for making average annual debt service payments to Chinese creditors worth $232 million between 2019 and 2019 and average annual debt service payments to Chinese creditors worth $60 million between 2020 and 2021 (a substantially lower figure due to repayment deferrals); however, it expected to make average annual debt service payments to Chinese creditors worth nearly $678 million over the next seven years (2022-2028). See https://www.dropbox.com/s/xv9xeboij1bkyds/Laos%20DRS%20Extract%20April%202023.xlsx?dl=0. 3. According to the World Bank, ‘[d]ebt service deferrals granted by major lenders in 2020-2021 amounted around 3.6 percent of GDP in 2021’ and ’[a]s a result, actual debt service payments are estimated to have declined to 48 percent of total revenues in 2021, compared to 65 percent in the 2021 [Government of Laos] plan.’ See https://pubdocs.worldbank.org/en/273661652363898384/Lao-Economic-Monitor-April-2022-final.pdf 4. According to the IMF, '[t]he authorities’ Debt Bulletin indicates that debt servicing to China was suspended: principal repayments in 2020 of about US$ 220 million, and of both principal and interest payments in 2021 and 2022 of about US$ 450 million and US$ 610 million, respectively.' See https://www.elibrary.imf.org/view/journals/002/2023/171/article-A003-en.xml

Number of official sources

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