By Daniel McDowell
No stranger to political controversy, the International Monetary Fund may soon find itself embroiled in one that pits China’s interests against those of the United States. Beijing’s hugely ambitious international development project, known as the Belt and Road Initiative, is raising fears of debt crises in the developing world, and the IMF may be called in to clean up the mess.
The U.S. is poised to oppose any IMF deal providing funds that would ultimately go to pay off Belt and Road-related tabs. How the IMF handles this situation could give clues about how the institution will deal with competing American and Chinese interests in an increasingly multipolar world.
...
Sri Lanka is not alone in its struggles. Earlier this year, a troubling report from the Center for Global Development identified eight countries where Chinese financing of Belt and Road projects will “significantly add to the risk of debt distress.” Of these eight countries, two—Sri Lanka and Mongolia—are currently under an IMF assistance program, and one—Pakistan—is reportedly mulling a request for economic aid from the IMF. Over the next several years, more countries could follow, and this could put the fund in a tricky spot.
Read the full article here.