‘Hidden Debt’ that Trapped Uganda

| SamvadaWorld Staff

Uganda is facing the biggest national crisis as it has been forced to surrender its only international airport to China for failing to pay back the loan it had taken in 2015. It had borrowed USD 207 million from the Export-Import Bank of China in 2015 when many in Uganda raised doubts over the provisions favouring China.

The rights and obligations of both parties were decided to be governed by the laws of China, which meant Uganda lost a vital component of its sovereignty. This forced Uganda to agree to the conditions that waive any immunity to its assets including those characterised as sovereign from any suit, the jurisdiction of any arbitral institution and judgments too.

Uganda’s debt has touched USD 17.96 billion, which is almost 50 per cent of its GDP and it is under tremendous pressure to repay $3bn in just the next 10 years. Ugandan President, Yoweri Museveni, sent a delegation to Beijing to renegotiate the loans but the request was turned down as China refused to allow any alteration in the original terms of the loan agreement.

The agreement has a specific clause of ‘surrendering’ its most prominent airport if Uganda cannot pay back the loan, a clause people in Uganda were unaware of when the deal was signed.

Uganda now joins the club of Sri Lanka, Malaysia, Maldives, who have been stuck in the “debt trap” created by “predatory” conditions of Chinese loans especially under the Belt and Road Initiative. Pakistan, Thailand, Kenya, Sudan, Ethiopia, Laos and Cambodia are some other countries that are on the verge of suffering a similar fate over debt trap engineered by China.

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