India warned nations across the world to be vigilant towards the dangers posed by unsustainable financing which leads to a vicious cycle of the debt traps, reflecting New Delhi's concern against Beijing's debt trap diplomacy across the world, especially in vulnerable South Asian nations bordering India.&nbsp;

"Peace is elusive and development a distant dream if resource crunch continues to exist. Hence, India in various fora, including in its current G20 presidency has worked towards reforms of International Financial Institutions," Madhu Sudan, Counsellor in India’s Permanent Mission to the United Nations said earlier this week during UN Security Council open debate on 'Maintenance of International Peace and Security: Promoting Sustaining Peace through Common Development'.

Also read |&nbsp;<a href="https://www.wionews.com/world/how-chinas-smokescreen-tricks-the-world-against-reforms-at-un-security-council-635950">How China’s ‘smokescreen’ tricks the world against reforms at UN Security Council</a>

Notably, the meet was being held under China’s presidency of the 15-nation UN body for the month of November.

Madhu Sudan said that as the concept paper of the meeting suggests, "we should work on transparent and equitable financing and be vigilant with respect to the dangers of unsustainable financing which leads to the vicious cycle of debt traps."

He further noted that peace is “elusive as in our lived experiences where the UN representing the international community struggled to restrain the vaccine apartheid during Covid or the rising inflation of food, fuel and fertilisers which unjustly affect the Global South. It is reflective enough that the voice of the Global South is lost and forgotten without representation."

<h2>'Security is indeed multi-dimensional': India at UN</h2>

India has been repeatedly warning the nations to steer clear of the dangers of "hidden agendas" in unsustainable debt, in a reference to China which is accused in the western capitals&nbsp;of pursuing "debt trap" diplomacy.

“Choosing peace, co-operation and multilateralism is essential for building our collective future free of wars, conflicts, terrorism, space race and the threats from new and emerging technologies amongst others,” Madhu Sudan said.

Also watch |&nbsp;India calls for UN security council expansion

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India said&nbsp;that while a comprehensive vision of international security must take into account&nbsp;the interdependence of the UN system's three pillars—peace and security, development, and human rights—it is important to remember that this does not imply that the Security Council should occupy all these functions.

Also read |&nbsp;<a href="https://www.wionews.com/world/france-backs-india-three-others-for-permanent-seat-at-un-security-council-659803">France assures support to India, three others for permanent seat at UN Security Council</a>

"Security is indeed multi-dimensional, but the Security Council's involvement in every aspect including those mandated to other UN bodies might not be advisable," he said.

(With inputs from agencies)

India warned nations across the world to be vigilant towards the dangers posed by unsustainable financing which leads to a vicious cycle of the debt traps, reflecting New Delhi's concern against Beijing's debt trap diplomacy across the world, especially in vulnerable South Asian nations bordering India.

India warned nations across the world to be vigilant towards the dangers posed by unsustainable financing which leads to a vicious cycle of the debt traps, reflecting New Delhi's concern against Beijing's debt trap diplomacy across the world, especially in vulnerable South Asian nations bordering India. "Peace is elusive and development a distant dream if resource crunch continues to exist. Hence, India in various fora, including in its current G20 presidency has worked towards reforms of International Financial Institutions," Madhu Sudan, Counsellor in India’s Permanent Mission to the United Nations said earlier this week during UN Security Council open debate on 'Maintenance of International Peace and Security: Promoting Sustaining Peace through Common Development'. Also read | How China’s ‘smokescreen’ tricks the world against reforms at UN Security Council Notably, the meet was being held under China’s presidency of the 15-nation UN body for the month of November. Madhu Sudan said that as the concept paper of the meeting suggests, "we should work on transparent and equitable financing and be vigilant with respect to the dangers of unsustainable financing which leads to the vicious cycle of debt traps." He further noted that peace is “elusive as in our lived experiences where the UN representing the international community struggled to restrain the vaccine apartheid during Covid or the rising inflation of food, fuel and fertilisers which unjustly affect the Global South. It is reflective enough that the voice of the Global South is lost and forgotten without representation." 'Security is indeed multi-dimensional': India at UN India has been repeatedly warning the nations to steer clear of the dangers of "hidden agendas" in unsustainable debt, in a reference to China which is accused in the western capitals of pursuing "debt trap" diplomacy. “Choosing peace, co-operation and multilateralism is essential for building our collective future free of wars, conflicts, terrorism, space race and the threats from new and emerging technologies amongst others,” Madhu Sudan said. Also watch | India calls for UN security council expansion × India said that while a comprehensive vision of international security must take into account the interdependence of the UN system's three pillars—peace and security, development, and human rights—it is important to remember that this does not imply that the Security Council should occupy all these functions. Also read | France assures support to India, three others for permanent seat at UN Security Council "Security is indeed multi-dimensional, but the Security Council's involvement in every aspect including those mandated to other UN bodies might not be advisable," he said. (With inputs from agencies)

With China presiding over session, India warns UN Security Council of 'vicious cycle of debt traps'

China's global ambitions have soared since the start of the 21st Century, decades after the country embarked on a remarkable journey to transform its closed economy into an export-driven economic powerhouse. Much of China's global ambitions hinge on its grand policy -- the Belt and Road Initiative (BRI). This policy, formulated in 2013, is an amalgamation of infrastructure projects covering Asia, Europe and Africa.

But considering BRI as just another global infrastructure plan will be like missing the forest for the trees. It involves President Xi Jinping's grand plans to reclaim China's past glory and shift the centre of geopolitical power from Europe to Beijing. Nevertheless, as lofty as it may seem, BRI has left a debt trap of $1 trillion for 150 – mostly developing – countries.

China's BRI-induced debt trap has brought countries to the brink of bankruptcy – anyone remembers Sri Lanka, Pakistan and Kenya? All these countries owed a substantial part of their debt to Beijing.

However, ongoing domestic development will likely be a speed-breaker to China's global ambitions.

China's domestic debt problem

Years of infrastructure-driven growth helped China connect every part of its expansive geography, create clusters of urban industrial centres and accelerate economic growth that was only paralleled by the US in the late 1800s and early 20th Century. But that itself is proving to be China's undoing.

According to economists at Goldman Sachs, China's local government debt could be over $23 trillion. That's about seven times the size of India's Gross Domestic Product.

For the uninitiated, local governments play a huge role in China's economic planning. They include the provincial, county and municipal administrations, which fund most local infrastructure projects.

While China has been on a decentralisation spree for many decades, 2015 was a watershed year for local governments. That year, the Chinese government amended the Budget Law to allow local governments to raise funds from the open market by selling bonds. While the amended law now gives the local government more power to finance projects, the various qualifying conditions have made it a not-so-popular funding source.

To circumvent the limitations of municipal bonds, local governments in China stuck around with the age-old Special Local Government Finance Vehicles (LGFVs) model. These organisations have been opened across the world's second-largest economy to finance major infrastructure projects.

The debts incurred by LGFVs are considered "hidden" as the local governments do not report them. Since LGFV debts are off the accounting books, local governments have time and again misused them to finance unsustainable projects. This has resulted in a ballooning debt crisis.

The reports of shanty towns or ghost towns with numerous unfinished highways, housing projects, and tourist attractions that the world keeps hearing are prime examples of local governments failing to sustain infrastructure projects due to high indebtedness.

For several years, local governments had it easy as the Chinese realty market boomed and local governments were able to generate revenue. But once the realty sector began weakening – remember realty giant Evergrande and its $300 billion debt? – in 2021, the repercussions have been unprecedented.

The true size of China's debt mountain can only be calculated when one adds the total local government debt with the realty and household debts — there is a significant overlap between the three.

Factor this: China's total debt is now more than the average in developed countries. It's much higher than the US, frequently grabbing headlines for its high indebtedness.

According to market analysts, China's debt is 282 per cent of its annual economic output, which is way higher than the developed world's average of 256 per cent. The ratio is 257 per cent for the US, China's arch-rival.

Impact on China's 'debt trap diplomacy

Given China's opaque statistical practices, the mystery around the exact debt figure is likely to be solved. Whatever the real debt figure, the repercussion can already be felt in China's predatory debt practices.

A New York Times report suggests that total lending to other countries is a mere six per cent of China's annual economic output. However, the ticking debt time bomb at home is making China's financial institutions not accept losses on their foreign lending, especially those made to low-income countries.

The first signs of China's unwillingness to ease debt repayment conditions for poor conditions could be seen in 2022. This was a year after the realty sector showed its first signs of weakness, and the country, entered an extended period of Covid lockdown.

A recent Reuters report shows that Beijing – the world's largest bilateral creditor – forgave $19 billion in 2021, but that figure dropped to $9 billion in 2022 and $1.7 billion by April 2023. This massive drop hints at China's fears that going slow on debt repayments will help the indebted nations but can backfire on its economy.

But China's growing international stature under Xi allows the country to stay on being a top global lender. It does not help China's cause that it is locked in an ongoing geopolitical tussle with the United States.

It is tough being in China's position right now. It must keep its position as a top lender to compete with the West. But Beijing will need to renegotiate loans to mollify debtors, as it has done with a few countries like Zambia.

However, this will also mean China is losing out on timely debt repayments.

China's global ambitions have soared since the start of the 21st Century, decades after the country embarked on a remarkable journey to transform its closed economy into an export-driven economic powerhouse.

China's global ambitions have soared since the start of the 21st Century, decades after the country embarked on a remarkable journey to transform its closed economy into an export-driven economic powerhouse. Much of China's global ambitions hinge on its grand policy -- the Belt and Road Initiative (BRI). This policy, formulated in 2013, is an amalgamation of infrastructure projects covering Asia, Europe and Africa. But considering BRI as just another global infrastructure plan will be like missing the forest for the trees. It involves President Xi Jinping's grand plans to reclaim China's past glory and shift the centre of geopolitical power from Europe to Beijing. Nevertheless, as lofty as it may seem, BRI has left a debt trap of $1 trillion for 150 – mostly developing – countries. China's BRI-induced debt trap has brought countries to the brink of bankruptcy – anyone remembers Sri Lanka, Pakistan and Kenya? All these countries owed a substantial part of their debt to Beijing. However, ongoing domestic development will likely be a speed-breaker to China's global ambitions. China's domestic debt problem Years of infrastructure-driven growth helped China connect every part of its expansive geography, create clusters of urban industrial centres and accelerate economic growth that was only paralleled by the US in the late 1800s and early 20th Century. But that itself is proving to be China's undoing. According to economists at Goldman Sachs, China's local government debt could be over $23 trillion. That's about seven times the size of India's Gross Domestic Product. For the uninitiated, local governments play a huge role in China's economic planning. They include the provincial, county and municipal administrations, which fund most local infrastructure projects. While China has been on a decentralisation spree for many decades, 2015 was a watershed year for local governments. That year, the Chinese government amended the Budget Law to allow local governments to raise funds from the open market by selling bonds. While the amended law now gives the local government more power to finance projects, the various qualifying conditions have made it a not-so-popular funding source. To circumvent the limitations of municipal bonds, local governments in China stuck around with the age-old Special Local Government Finance Vehicles (LGFVs) model. These organisations have been opened across the world's second-largest economy to finance major infrastructure projects. The debts incurred by LGFVs are considered "hidden" as the local governments do not report them. Since LGFV debts are off the accounting books, local governments have time and again misused them to finance unsustainable projects. This has resulted in a ballooning debt crisis. The reports of shanty towns or ghost towns with numerous unfinished highways, housing projects, and tourist attractions that the world keeps hearing are prime examples of local governments failing to sustain infrastructure projects due to high indebtedness. For several years, local governments had it easy as the Chinese realty market boomed and local governments were able to generate revenue. But once the realty sector began weakening – remember realty giant Evergrande and its $300 billion debt? – in 2021, the repercussions have been unprecedented. The true size of China's debt mountain can only be calculated when one adds the total local government debt with the realty and household debts — there is a significant overlap between the three. Factor this: China's total debt is now more than the average in developed countries. It's much higher than the US, frequently grabbing headlines for its high indebtedness. According to market analysts, China's debt is 282 per cent of its annual economic output, which is way higher than the developed world's average of 256 per cent. The ratio is 257 per cent for the US, China's arch-rival. Impact on China's 'debt trap diplomacy Given China's opaque statistical practices, the mystery around the exact debt figure is likely to be solved. Whatever the real debt figure, the repercussion can already be felt in China's predatory debt practices. A New York Times report suggests that total lending to other countries is a mere six per cent of China's annual economic output. However, the ticking debt time bomb at home is making China's financial institutions not accept losses on their foreign lending, especially those made to low-income countries. The first signs of China's unwillingness to ease debt repayment conditions for poor conditions could be seen in 2022. This was a year after the realty sector showed its first signs of weakness, and the country, entered an extended period of Covid lockdown. A recent Reuters report shows that Beijing – the world's largest bilateral creditor – forgave $19 billion in 2021, but that figure dropped to $9 billion in 2022 and $1.7 billion by April 2023. This massive drop hints at China's fears that going slow on debt repayments will help the indebted nations but can backfire on its economy. But China's growing international stature under Xi allows the country to stay on being a top global lender. It does not help China's cause that it is locked in an ongoing geopolitical tussle with the United States. It is tough being in China's position right now. It must keep its position as a top lender to compete with the West. But Beijing will need to renegotiate loans to mollify debtors, as it has done with a few countries like Zambia. However, this will also mean China is losing out on timely debt repayments.

$23 trillion-plus & counting: Will China's surging local government debt crisis affect its global ambitions?

Sri Lanka is moving away from China while getting close to India over the failure of Colombo to pay back Chinese loans worth $4.5 billion, amidst fears of a "debt trap".

Sri Lanka's credit rating has been downgraded by Fitch Ratings and Moody's Investor Service due to delays in obtaining new funds, which are necessary to satisfy loan commitments.

The country is on the verge of defaulting.

On January 17, Sri Lankan President Gotabaya Rajapaksa told visiting Chinese Foreign Minister Wang Yi that "it would be a great relief to the country if attention could be paid to restructuring the debt repayments as a solution to the economic crisis that has arisen in the face of the COVID-19 pandemic."

However, China rejected the request, with Chinese Foreign Ministry Spokesperson Wang Wenbin remarking, "Sri Lanka will surely overcome the temporary difficulties as soon as possible."

Over the past few weeks, the country has struggled to pay off its fuel import bills.Recently, India also provided financial assistance of 2.4 billion USD to Sri Lanka following a two-day official visit by the Sri Lankan Foreign Minister, GL Peiris, to India from February 6 to 8. GL Peiris said that Colombo was committed to special relations with New Delhi.

Last Tuesday, the Indian High Commissioner in Sri Lanka handed over a 40,000 MT fuel consignment by Indian Oil Corp Ltd to the Sri Lankan Energy Minister, Udaya Gammanpila.

"#India - a committed partner and a true friend of #SriLanka. The High Commissioner handed over a 40,000 MT fuel consignment by @IndianOilcl to the Honourable Energy Minister @UPGammanpila today.

India and Sri Lanka partnership continues to work towards energy security of #lka," the Indian High Commission in Sri Lanka tweeted.In October last year, the Department of Agriculture in Colombo detected the highly contaminated organic fertiliser sent by China and cancelled the fertiliser and requested India to export nano nitrogen liquid fertilizer.

Fears have also been rife in Colombo regarding Chinese loans, as the country has previously been forced to hand over strategic projects like Hambantota port to the Chinese on lease for non-repayment of loans.

Sri Lanka is moving away from China while getting close to India over the failure of Colombo to pay back Chinese loans worth $4.5 billion, amidst fears of a "debt trap".

Sri Lanka is moving away from China while getting close to India over the failure of Colombo to pay back Chinese loans worth $4.5 billion, amidst fears of a "debt trap". Sri Lanka's credit rating has been downgraded by Fitch Ratings and Moody's Investor Service due to delays in obtaining new funds, which are necessary to satisfy loan commitments. The country is on the verge of defaulting. On January 17, Sri Lankan President Gotabaya Rajapaksa told visiting Chinese Foreign Minister Wang Yi that "it would be a great relief to the country if attention could be paid to restructuring the debt repayments as a solution to the economic crisis that has arisen in the face of the COVID-19 pandemic." However, China rejected the request, with Chinese Foreign Ministry Spokesperson Wang Wenbin remarking, "Sri Lanka will surely overcome the temporary difficulties as soon as possible." Over the past few weeks, the country has struggled to pay off its fuel import bills.Recently, India also provided financial assistance of 2.4 billion USD to Sri Lanka following a two-day official visit by the Sri Lankan Foreign Minister, GL Peiris, to India from February 6 to 8. GL Peiris said that Colombo was committed to special relations with New Delhi. Last Tuesday, the Indian High Commissioner in Sri Lanka handed over a 40,000 MT fuel consignment by Indian Oil Corp Ltd to the Sri Lankan Energy Minister, Udaya Gammanpila. "#India - a committed partner and a true friend of #SriLanka. The High Commissioner handed over a 40,000 MT fuel consignment by @IndianOilcl to the Honourable Energy Minister @UPGammanpila today. India and Sri Lanka partnership continues to work towards energy security of #lka," the Indian High Commission in Sri Lanka tweeted.In October last year, the Department of Agriculture in Colombo detected the highly contaminated organic fertiliser sent by China and cancelled the fertiliser and requested India to export nano nitrogen liquid fertilizer. Fears have also been rife in Colombo regarding Chinese loans, as the country has previously been forced to hand over strategic projects like Hambantota port to the Chinese on lease for non-repayment of loans.

Sri Lanka getting closer to India to deal with Chinese 'debt trap'

Chinese Foreign Minister Wang Yi on Thursday refuted claims that China was tarpping African nations in debt trap by lending huge amounts of loans. Yi said such claims was just a 'narrative' pushed by opponents. He was speaking in Mobasa, Kenya ahead of touring China-funded infrastructure projects in the country.

Wang Yi claimed that Chinese loans to African nations were 'mutually benefiting'. He said that the loans were not a strategy to win diplomatic and commercial concessions

Wang, speaking ahead of touring Beijing-funded infrastructure projects in Kenya, said China's considerable lending to Africa was "mutually benefiting" and not a strategy to extract diplomatic and commercial concessions.

"That is simply not a fact. It is speculation being played out by some with ulterior motives," he told reporters in the Kenyan port city of Mombasa.

Also Read | <a href="https://www.wionews.com/science/hotter-than-the-real-sun-chinas-artificial-sun-sets-massive-record-for-plasma-fusion-442592">Hotter than the real Sun?: China's 'artificial Sun' sets massive record for plasma fusion</a>

"This is a narrative that has been created by those who do not want to see development in Africa. If there is any trap, it is about poverty and underdevelopment," he said, speaking through an interpreter.

Wang's three-nation tour of Eritrea, Kenya and the Comoros follows a trip to Africa by US Secretary of State Antony Blinken in November that in part aimed at countering China's growing influence on the continent.

China is Africa's largest trading partner, with direct trade worth over $200 billion (177 billion euros) in 2019, according to official Chinese figures.&nbsp;

China is Kenya's second-largest lender after the World Bank and has funded a number of costly infrastructure projects that have raised concerns about Nairobi taking on more debt than it can afford.

In Mombasa, Wang held a closed-door meeting with a team of government ministers and signed agreements on trade and investment, health, security, climate change and green technology transfer.

He later met President Uhuru Kenyatta and visited the Port of Mombasa, where China is constructing a new $353 million terminal to allow larger oil tankers to berth.

"The visit is a testament to the deepening of relations between the two countries," said Kenya's foreign minister, Raychelle Omamo.

(With inputs from agencies)

Chinese Foreign Minister Wang Yi on Thursday refuted claims that China was tarpping African nations in debt trap by lending huge amounts of loans. Yi said such claims was just a 'narrative' pushed by opponents.

Chinese Foreign Minister Wang Yi on Thursday refuted claims that China was tarpping African nations in debt trap by lending huge amounts of loans. Yi said such claims was just a 'narrative' pushed by opponents. He was speaking in Mobasa, Kenya ahead of touring China-funded infrastructure projects in the country. Wang Yi claimed that Chinese loans to African nations were 'mutually benefiting'. He said that the loans were not a strategy to win diplomatic and commercial concessions Wang, speaking ahead of touring Beijing-funded infrastructure projects in Kenya, said China's considerable lending to Africa was "mutually benefiting" and not a strategy to extract diplomatic and commercial concessions. "That is simply not a fact. It is speculation being played out by some with ulterior motives," he told reporters in the Kenyan port city of Mombasa. Also Read | Hotter than the real Sun?: China's 'artificial Sun' sets massive record for plasma fusion "This is a narrative that has been created by those who do not want to see development in Africa. If there is any trap, it is about poverty and underdevelopment," he said, speaking through an interpreter. Wang's three-nation tour of Eritrea, Kenya and the Comoros follows a trip to Africa by US Secretary of State Antony Blinken in November that in part aimed at countering China's growing influence on the continent. China is Africa's largest trading partner, with direct trade worth over $200 billion (177 billion euros) in 2019, according to official Chinese figures. China is Kenya's second-largest lender after the World Bank and has funded a number of costly infrastructure projects that have raised concerns about Nairobi taking on more debt than it can afford. In Mombasa, Wang held a closed-door meeting with a team of government ministers and signed agreements on trade and investment, health, security, climate change and green technology transfer. He later met President Uhuru Kenyatta and visited the Port of Mombasa, where China is constructing a new $353 million terminal to allow larger oil tankers to berth. "The visit is a testament to the deepening of relations between the two countries," said Kenya's foreign minister, Raychelle Omamo. (With inputs from agencies)

China not trapping African nations in debt, claims foreign minister

In yet another example of China`s debt-trap diplomacy, Kenya has been roped in a deal with a six-month debt repayment holiday worth USD 245 million. The deal was struck a week after the Paris club of creditors, an informal group of creditors offered the same debt-service suspension worth USD 300 million until the end of June 2021.

The African nation has been struggling to meet the repayments, as some of the projects, including the Standard Gauge Railway - built as part of Beijing`s Belt and Road Initiative, are not generating enough income to pay for themselves, South China Morning Post reported. This comes after Kenya was set to make its first repayment on a USD 1.48 billion loans from the Export-Import Bank of China (Exim Bank) that was used to build a railway line from the capital Nairobi to the town of Naivasha in the Central Rift Valley.

According to the rescheduling deal, Kenya will have the next six years to make payments on the suspended debt service costs including a one-year grace period after June 2021. It also obtained six months of debt-service suspension of USD 300 million from Paris Club creditors until the end of June 2021.The Kenyan Finance Ministry said, Kenya, however, will not seek similar suspensions from either multilateral or commercial lenders to safeguard its sovereign rating and its future access to international financial markets.

Also read:&nbsp;<a href="http://13.235.153.162/south-asia/chinas-debt-trap-is-india-out-of-the-colombo-port-deal-314771" hreflang="en">China's debt trap: Is India out of the Colombo Port deal?</a>

Kenya`s National Treasury Secretary Ukur Yatani said the deal with Beijing would give the country "the opportunity and a break on the kind of liquidity that we desire", South China Morning Post reported."We can now use that money to honour our obligations, including continuing to finance the national government and county governments," SCMP quoted Yatani as saying."We are happy to get the feedback that we don`t need to pay now," he said.But critics accuse President Uhuru Kenyatta`s government of saddling future generations with unbearable debt burdens by borrowing more funds from China. The government says borrowing to build the infrastructure will spur economic development.

Citing the National Treasury`s loan register, SCMP reported that Nairobi was supposed to make 30 payments to Exim Bank between Thursday and July 21, 2035. The interest rate had been set at 3 per cent above the benchmark London interbank offered rate.

Repayments on a separate loan of USD 1.6 billion from Exim Bank that Kenya used to build the first phase of the Mombasa-Nairobi Standard Gauge Railway will become due in July.

Also read:&nbsp;<a href="http://13.235.153.162/opinions-blogs/is-nepal-falling-into-chinas-debt-trap-302858" hreflang="en">Is Nepal falling into China's debt trap?</a>

Also, repayments on a 50 million yuan (USD 7.7 million) loan for "economic and technical cooperation" are due to begin on April 1, and in September on a 660 million yuan loan used to upgrade Nairobi`s electricity network, SCMP reported. Kenya was due to pay China about USD 499 million by the end of June, according to the World Bank Debtor Reporting System.

Kenya has joined several other African governments seeking China "debt-trap diplomacy."China`s foreign ministry said this month that Beijing had signed payment suspension agreements with 12 African countries and provided waivers on mature interest-free loans for 15 African countries, SCMP reported. Meanwhile, China is Kenya`s largest individual lender having advanced about USD 6.7 billion worth of finance to build roads, railways, ports and other infrastructure as of the end of September

In yet another example of China`s debt-trap diplomacy, Kenya has been roped in a deal with a six-month debt repayment holiday worth USD 245 million. The deal was struck a week after the Paris club of creditors, an informal group of creditors offered the same debt-service suspension worth USD 300 million until the end of June 2021.

In yet another example of China`s debt-trap diplomacy, Kenya has been roped in a deal with a six-month debt repayment holiday worth USD 245 million. The deal was struck a week after the Paris club of creditors, an informal group of creditors offered the same debt-service suspension worth USD 300 million until the end of June 2021. The African nation has been struggling to meet the repayments, as some of the projects, including the Standard Gauge Railway - built as part of Beijing`s Belt and Road Initiative, are not generating enough income to pay for themselves, South China Morning Post reported. This comes after Kenya was set to make its first repayment on a USD 1.48 billion loans from the Export-Import Bank of China (Exim Bank) that was used to build a railway line from the capital Nairobi to the town of Naivasha in the Central Rift Valley. According to the rescheduling deal, Kenya will have the next six years to make payments on the suspended debt service costs including a one-year grace period after June 2021. It also obtained six months of debt-service suspension of USD 300 million from Paris Club creditors until the end of June 2021.The Kenyan Finance Ministry said, Kenya, however, will not seek similar suspensions from either multilateral or commercial lenders to safeguard its sovereign rating and its future access to international financial markets. Also read: China's debt trap: Is India out of the Colombo Port deal? Kenya`s National Treasury Secretary Ukur Yatani said the deal with Beijing would give the country "the opportunity and a break on the kind of liquidity that we desire", South China Morning Post reported."We can now use that money to honour our obligations, including continuing to finance the national government and county governments," SCMP quoted Yatani as saying."We are happy to get the feedback that we don`t need to pay now," he said.But critics accuse President Uhuru Kenyatta`s government of saddling future generations with unbearable debt burdens by borrowing more funds from China. The government says borrowing to build the infrastructure will spur economic development. Citing the National Treasury`s loan register, SCMP reported that Nairobi was supposed to make 30 payments to Exim Bank between Thursday and July 21, 2035. The interest rate had been set at 3 per cent above the benchmark London interbank offered rate. Repayments on a separate loan of USD 1.6 billion from Exim Bank that Kenya used to build the first phase of the Mombasa-Nairobi Standard Gauge Railway will become due in July. Also read: Is Nepal falling into China's debt trap? Also, repayments on a 50 million yuan (USD 7.7 million) loan for "economic and technical cooperation" are due to begin on April 1, and in September on a 660 million yuan loan used to upgrade Nairobi`s electricity network, SCMP reported. Kenya was due to pay China about USD 499 million by the end of June, according to the World Bank Debtor Reporting System. Kenya has joined several other African governments seeking China "debt-trap diplomacy."China`s foreign ministry said this month that Beijing had signed payment suspension agreements with 12 African countries and provided waivers on mature interest-free loans for 15 African countries, SCMP reported. Meanwhile, China is Kenya`s largest individual lender having advanced about USD 6.7 billion worth of finance to build roads, railways, ports and other infrastructure as of the end of September

China's debt-trap diplomacy: Kenya offered 'debt repayment holiday' for 6 months worth $245 million