Belt, Road initiative help improve economic ties in Africa: IMF official

The China-proposed Belt and Road (B&R) initiative has been seen positively in African countries as it could help strengthen regional economic ties, and local policymakers are expected to seek a balance between increasing investment and sustainable growth, a senior official with the IMF said on Wednesday.

There has been a large increase of financial flows from China to sub-Saharan Africa, the majority of which has been aimed at addressing the infrastructure gaps, Abebe Aemro Selassie, director of the African Department of the IMF, told the Global Times.

"In terms of whether this can create debt sustainability problems, you have to also look at it from the borrower countries' side," he said, noting that policymakers in the region have to strike the right balance between addressing infrastructure needs and avoiding debt sustainability problems.

Some Western countries have been accusing China of lending too much to African countries and having them trapped in debt.

"The debt issue can mainly be understood in terms of the domestic policy choices that policymakers face," noted Selassie.

"What China could do better, for example, is to bring more transparency and more information about the extent of Chinese credits to countries in the region," he said.

"The B&R initiative is generally a very positive one, which could help strengthen regional economic ties," he noted.

But there are some challenges as well, the official said, adding that it is important for policymakers to make sure that borrowing is consistent with maintaining sustainability.

China has honored its 2015 promise to provide Africa with funding support totaling $60 billion during the 2018 Beijing Summit of the Forum on China-Africa Cooperation (FOCAC), which was held from Monday to Tuesday.

When asked how the funds might be used, Selassie said "there's been a small change in the allocation of resources, but overall financing envelope is similar to the commitments at the last FOCAC in 2015."

"I think from African countries' side, the key challenge will be to make sure that they use these resources on projects that will yield relatively high economic rates of returns."

China's emergence on the global scene as a strong economic power has benefited Africa quite significantly, he continued, adding that there's been a multi-faceted China-Africa engagement that involves trade, financing and technology transfer.

The official said that investment from the Chinese private sector in Africa has increased rapidly. Africa can handle a lot of private investment rather than public investment at the moment, because public sector balance sheets are under strain, he said. "China can play a big role in helping increase private investment levels in the region."

China-Africa links will strengthen in the coming years as sub-Saharan Africa holds immense growth potential with a rapid increase in the labor force, according to the official.