Mnuchin Calls for IMF to Increase Transparency of Surging Chinese Infrastructure Lending

WASHINGTON—Treasury Secretary Steven Mnuchin called on the International Monetary Fund and World Bank to launch a “joint action plan” to better highlight the rapid run-up in debt associated with China’s lending for international infrastructure projects.

“Increasingly we see instances where [low-income countries] have borrowed excessively, and unsustainably, from large, often non-transparent emerging sovereign creditors like China and/or private creditors,” Mr. Mnuchin said in a statement at the spring meetings of the IMF.

Mr. Mnuchin’s call for an action plan to more clearly document the amount of rising debt is aimed squarely at China’s Belt-and-Road Initiative, which is intended to fund infrastructure projects like superhighways, railroads, harbors and airports that deepen international trade linkages to China.

China has moved so rapidly to launch the projects, and at such large scale, that international observers have struggled to keep track of the extent of the debt, which is issued through a wide range of Chinese local government and state-controlled institutions, but ultimately traces back to one source: Beijing.

According to a report last month from the Center for Global Development, Djibouti, Tajikistan, Kyrgyzstan, Laos, the Maldives and Mongolia are among nations that will soon owe more than half their external debt to China.

Chinese President Xi Jinping has made the Belt-and-Road Initiative a centerpiece of his plans to expand Beijing’s influence over the world economy.

IMF Managing Director Christine Lagarde traveled to China last week, where the IMF and the People’s Bank of China hosted a joint conference on the initiative.

In remarks at the conference, Ms. Lagarde made the case to China for more careful stewardship and more transparency, saying that “in countries where public debt is already high, careful management of financing terms is critical. This will protect both China and partner governments from entering into agreements that will cause financial difficulties in the future.”

The calls from Mr. Mnuchin, however, could increase the urgency with which the IMF and World Bank work to bring transparency to China’s efforts.

The IMF and World Bank should work together to “obtain more comprehensive debt data from member countries, to more clearly flag data deficiencies in debt sustainability analyses, and to enhance debt sustainability through strengthened use of debt limits and non-concessional borrowing policies,” he said.

Write to Josh Zumbrun at

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