China defers Tonga loan repayments as Pacific country joins Belt and Road
PORT MORESBY (Reuters) – Tonga has joined China’s Belt and Road Initiative and received a reprieve from Beijing on debt payment schedule shortly before onerous repayment schedule begins loans.
Lopeti Senituli, political adviser to Tongan Prime Minister ‘Akilisi Pōhiva, told Reuters by email on Sunday that Tonga had signed a Belt and Road Memorandum of Understanding and the concessional loan had been deferred for five years.
Tonga is one of the eight island nations in the South Pacific that owe a significant debt to China. The postponement came just as Tonga was about to begin repaying the debt principal, which is expected to strain its finances.
China’s Foreign Ministry did not immediately respond to the request for comment on Sunday.
Tonga’s financial dependence on China dates back to just over a decade after deadly riots in Tonga’s capital, Nuku’alofa, which destroyed much of the small nation’s central business and government districts. Peaceful.
The government rebuilt the city with Chinese funding, and China’s initial lending of some $ 65 million to the island now exceeds $ 115 million, due to additional interest and borrowing. This is nearly a third of Tonga’s annual gross domestic product, according to budget documents
The issue of debt issued by China was at the forefront of the Asia-Pacific Economic Cooperation Summit, held in Papua New Guinea (PNG). US Vice President Mike Pence on Saturday criticized President Xi Jinping’s flagship program, saying countries should not accept debt that compromises their sovereignty.
Although most of the Pacific island nations are not members of APEC, their representatives have been invited to attend events and have entered into talks with larger regional neighbors such as China and Australia.
China’s official Belt and Road website reported last week that Fiji has committed to Belt and Road, joining Samoa and PNG.
Reporting by Charlotte Greenfield to PORT MORESBY; additional reporting by Ben Blanchard at BEIJING; written by Jonathan Barrett; Editing by Sam Holmes