Here’s some history. In the mid-1990s and early 2000s, the United States and many European nations agreed to lower the valuation of loans they had provided to the poorest nations — something that is known in finance as “taking a haircut.” Since then, many G-7 nations have been reluctant to provide large loans again, so African and southeast Asian countries have increasingly turned to China and private lenders for funding. China is now the world’s largest government creditor to developing nations, accounting for nearly 50 percent of these loans, up from 18 percent in 2010, according to the World Bank. These Chinese loans were often at high interest rates. It would have been a stretch for poor nations to repay them even in good times, and now it’s impossible after a global pandemic and Russia’s war in Ukraine have decimated low-income economies where people are struggling to afford food.

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