The reality with debt

210 Hits

Re: You have been warned, Samoa!

I mentioned this a couple of years back when expressing concern over the level of debt back then to the Chinese EXIMBANK.

This state owned bank has been operating in Africa and the Indian Ocean for years and the modus operandi is always the same. 

Load up a country with more debt than they can service and then demand land and other resources when the debt falls behind.

High interest is not the issue at 3%, but the no payments for 5 years is the trap, allowing multiple loans to be taken over a period then suddenly the payments start building up and the country is crippled.

The government calls these concessionary loans, or soft loans. 

The concessions are a no payment period and a relatively low interest rate. 

Imho, you would have to soft in the head to allow your country to gorge itself for 6 or 8 years, only to find that the payments are eating up the lion’s share of government revenue.

To shift budget from essential services such as provision of clean water, cheaper power, sanitation, useful infrastructure such as flood mitigation and better, safer roads is a sure sign that the loan repayments are ramping up. Sounds familiar.



© Samoa Observer 2016

Developed by Samoa Observer in Apia