Africa called for debt relief from China as its largest single-state creditor. China then started to deliberate on the specific implementation plans for debt relief.
The Chinese government laid out two specific commitments on debt relief that involves Africa. One of which was suspending payments of countries enlisted in the G-20 Debt Service Suspension Initiative for Poorest Countries.
The debt relief does not include assistance for transactions commercial in nature and would not cover commercial lenders. At the same time, concessional loans that were found a significant part of the debts of Africa from China would also be excluded from coverage.
A review of China's Forum on China-Africa-Cooperation (FOCAC) showed that 50 percent of the financing between the countries is concessional in nature. Concessional loans comprise of three billion USD deal in 2006 alone. China also offered concessional buyers' credit at two billion USD. Under the 2009 FOCAC financial pledges, China would offer 10 billion USD-worth of concessional loans that are 10 times larger than the Special Loan for the African Small- and Mid-Sized Enterprise. The 2012 FOCAC upped the offer to 20 billion USD, while in 2015, it was raised to 35 billion USD. In 2018, however, the grants, zero-interest loans, and concessional loans made up 25 percent of a 60 billion USD-worth China loan to African countries.
Finance ministers and central bank governors started deliberations last April 15, 2020. The agreement includes the Chinese Foreign Ministry recognizing that countries under the G-20, including China, would suspend both interest and principal repayments starting on May 1, 2020, until the rest of the year. The suspension applies to all 76 eligible countries, including Angola and 40 sub-Saharan African countries.
Last month, China made another official pledge, as announced by China President Xi Jinping. The announcement was made during the 73rd World Health Assembly last May 18, 2020. China promised to provide two billion USD in two years to help these countries cope with the adverse effects of the pandemic.
The donation would be categorized as "international assistance" presumed to be understood as taken from China's foreign aid budget. The same budget would also be utilized for the economic and social development of the countries. China also opened the deal for allocation for debt reliefs. It was also expressed to mean that China would shoulder the costs of carrying such aids.
The efforts were said to be offered bilaterally. During a press conference at China's legislative session last May 24, 2020, Chinese foreign minister Wang Yi confirmed that China would pursue two channels for African countries' debt relief.
Last June 7, 2020, China reconfirmed these frameworks after it launched the white paper on "Fighting COVID-19: China's Action." The Chinese foreign minister then confirmed that China's two billion USD conation would cover both bilateral and multilateral initiatives. These would promote public health, poverty alleviation, and economic recovery for these countries. Moreover, the 50 million USD donated to the World Health Organization earlier this year was included in the two-billion budget.
