China defers Tonga's loan payments as Pacific nation signs up to Belt and Road
* Tonga was about to start an onerous repayment schedule
* Tonga's debt to China represents about one-third of its
(Adds detail on Tonga budget, APEC forum)
By Charlotte Greenfield
PORT MORESBY, Nov 18 (Reuters) - Tonga has signed up to
China's Belt and Road initiative and has received a reprieve
from Beijing on the timing of debt payments shortly before an
onerous schedule to repay loans was due to start.
Lopeti Senituli, political advisor to Tongan Prime Minister
'Akilisi Pōhiva, told Reuters by email on Sunday that Tonga had
signed a Belt and Road memorandum of understanding, and that the
concessional loan had been deferred for five years.
Tonga is one of eight island nations in the South Pacific
that owe significant debt to China. The deferment came just as
Tonga was set to commence principal repayments on the debt,
which is expected to put severe strain on its finances.
China's ministry of foreign affairs did not immediately
respond to request for comment on Sunday.
Tonga's financial reliance on China dates back just over a
decade after deadly riots in the capital of Tonga, Nuku'alofa,
destroyed much of the small Pacific nation's central business
and government districts.
The government rebuilt the city with Chinese financing, and
the roughly $65 million in China's initial loans to the island
now exceeds $115 million, due to interest and additional
borrowings. This represents almost one-third of Tonga's annual
gross domestic product, budget papers show
The issue of Chinese-issued debt has been at the forefront
of the Asia Pacific Economic Co-operation summit, held in Papua
New Guinea (PNG). On Saturday, U.S. Vice President Mike Pence
criticised President Xi Jinping's flagship programme, saying
countries should not accept debt that compromised their
While most Pacific island nations are not APEC members,
their representatives were invited to attend events, and have
been engaged in talks with larger regional neighbours such as
China and Australia.
China's official Belt and Road website reported last week
that Fiji had made a commitment to Belt and Road, joining the
likes of Samoa and PNG.
(Reporting by Charlotte Greenfield in PORT MORESBY; additional
reporting by Ben Blanchard in BEIJING; writing by Jonathan
Barrett; Editing by Sam Holmes)
First Published: 2018-11-18 04:42:01
Updated 2018-11-18 06:38:44
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