THE level of debts that Pacific Island nations owe to the Chinese government should be addressed at the leadership level, says Winston Peters.
Speaking on the sidelines of the one-day Forum Foreign Ministers conference in Samoa recently, the New Zealand Foreign Minister echoed the sentiments of Tonga’s Prime Minister Akilisi Pohiva and said the matter should be on the agenda at next month’s Pacific Islands Forum (PIF) Leaders Summit in Nauru.
Pohiva recently cautioned Pacific Island nations to ‘slow down’ asking China for loans, and recounted the experiences of his own country which currently owes the Chinese government US$160 million in debts and had its request for a deferral of repayment and conversion into grants knocked back by Beijing.
Tonga’s predicament has been worsened by the frequent changes in government according to Peters, which has led to the current government inheriting the debts of its predecessor.
“And also circumstances can get out of hand and as you know whether it be household or a country and its debts… the real issue is that can they pay it back.”
“If they can’t there are dramatic serious consequences for a family as it is for a nation.
“It is good idea the leaders discuss all aspects of this issue about the debt accumulation its purpose for the debt in the first place and the capacity to repay,” he said.
Peters said converting loans into grants does not work when committing oneself to debts.
“There are consequences of committing ourselves to debt, and it behooves the government to understand that before walking into a non-repayment trap.”
“All the Pacific Island countries should sign this submission, asking the Chinese government to forgive their debts and to me that is the only way we can all move forward, if we just can’t pay off our debts,” he said.