BACK in August, the Ugandan government asked the China Exim Bank for a repayment delay on the loans needed to build the $1.7bn Karuma dam project. A week went by and the bank replied with a simple answer: no.
The government had requested the repayment delay because completing the dam’s construction may be delayed by as long as seven months.
In a letter dated August 25, which was sent to a number of high-level Ugandan officials and recently became public, the bank basically said that’s not their problem and the government is obligated under the agreement to repay its debts.
‘According to the Buyer Credit Loan Agreement of the Karuma Project, both the available period and the grace period of the project will expire on December 24, 2020, then the repayment period commences, meaning the principal should be repaid accordingly, no matter the construction of the project is finished or not.’
The letter provides rare insight into the intensely transactional nature of China’s development finance in Africa.
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