Disclosure of all debt contracts to citizens – Int’l report
Kaieteur News – A damning report released recently by the Center for Global Development (GDF) calls for all debt contracts to be disclosed, as “public debt should be public.”
Report title: “How China Lends; A Rare Look into 100 Debt Contracts with Foreign Governments, ”done in collaboration with“ AidData ”- a US and other research lab, assessed 100 contracts between Chinese state-owned entities and government lenders in 24 from developing countries in Africa. , Asia, Eastern Europe, Latin America and Oceania.
The report first outlined that China is the world’s largest official creditor, but the world often lacks basic facts about the terms and conditions of its borrowing. According to the report, that is because “very few contracts between Chinese lenders and their government lenders have never been published or studied.” The report was also alleged to be the first systematic analysis of China’s foreign lending legal terms.
Center-for-Global Development
Based on their analysis of the contracts, it was highlighted in the report that Chinese contracts usually contain unusual confidentiality clauses, prohibiting their lenders from disclosing the terms or even the existence of the debt. The contracts even resemble cancellation, acceleration and stabilization clauses, which could potentially allow the lender to influence a nation’s due domestic and foreign policies. “Even if these terms were unenforceable in court, the mix of secrecy, seniority and policy influence could limit the sovereign debtor’s crisis management options and complicate debt renegotiation,” the report added, adding all in all, that the contracts were skewed in a way to overcome enforcement barriers, making China “a muscular and commercial-lender to the developing world.”
In addition, their study of Chinese foreign loan contracts reveals that Chinese lenders are cleverly adapting and expanding standard contract tools to maximize their repayment prospect, which includes lender-managed revenue accounts , and defends a wide range of Chinese interests in the lending country.
To that end, the report emphasized the need for much more transparency in sovereign lending, including but not limited to government-to-government loans. He even went on to note that while China may be one of the world’s largest official creditors, the problems of transparency that exist in large numbers worldwide – as it relates to sovereign debt are not limited to China. “Almost no official OECD (Organization for Economic Co-operation and Development) and non-OECD lenders release the subject of their loan contracts publicly. Neither do debtor governments, ”he lamented. The OECD is an international organization, to which many countries are committed and aims to build better policies for better lives.
As such, the report makes the firm conviction that disclosure of all debt contracts, although politically difficult, should “become the norm rather than the exception” because it would give citizens the ability to hold their governments are liable “for the debt contracts signed in their name. “The report therefore outlines that” public debt should be public. “