52 Countries Owe China More Than the IMF. Restructuring Has Stalled.

An analysis of sovereign debt data from the World Bank's International Debt Statistics database reveals a fundamental shift in the architecture of developing-country debt: in 52 low- and middle-income nations, bilateral debt owed to China now exceeds the combined obligations to the International Monetary Fund, the World Bank, and the African Development Bank. The median ratio is 2.1 to 1. In Djibouti, it is 7 to 1. In the Republic of Congo, 4.3 to 1.

This matters because when countries default — and 18 have either defaulted or sought restructuring since 2020 — the traditional debt workout mechanisms were designed for a world where the Paris Club of Western creditors held the majority of bilateral claims, and multilateral institutions like the IMF coordinated relief. China is not a Paris Club member. It does not publish the terms of most of its loan agreements. And when asked to participate in coordinated restructuring, it has delayed, demanded collateral, or refused outright.

The result is a debt crisis without a functioning resolution system. Countries in distress cannot restructure without Chinese participation. China will not restructure on terms acceptable to other creditors. And the populations of debtor nations — who never voted on the infrastructure projects that generated the debt — pay the cost in foregone healthcare, education, and development spending while bondholders, multilateral banks, and Beijing argue over who takes the haircut.

What the Data Shows

The Editorial analysed bilateral debt data for 122 countries classified by the World Bank as low- or middle-income, combining the institution's International Debt Statistics with loan-level data from AidData's Global Chinese Development Finance Dataset and the Boston University Global Development Policy Center. The dataset covers commitments and disbursements from 2000 through December 2025.

In 52 countries, bilateral debt to Chinese policy banks — primarily the China Development Bank and the Export-Import Bank of China — and the Chinese government exceeded total outstanding obligations to the IMF, World Bank (IBRD and IDA combined), and regional development banks. In 23 of those countries, Chinese claims exceeded multilateral debt by a factor of three or more.

The concentration is highest in sub-Saharan Africa, where 34 countries owe more to China than to multilateral creditors, and in countries that participated in China's Belt and Road Initiative. Infrastructure projects — ports, railways, highways, power plants — account for 68% of the total exposure. In many cases, the projects were financed at commercial or near-commercial rates, with collateral requirements that included revenue streams from the infrastructure itself or commodity export receipts.

The Restructuring Impasse

When a country cannot service its debt, the standard playbook involves three steps: negotiate a program with the IMF that includes fiscal consolidation and structural reforms; secure commitments from bilateral creditors (coordinated through the Paris Club) and commercial creditors (typically bondholders) to provide debt relief on comparable terms; and obtain approval from multilateral creditors, who generally maintain preferred creditor status and do not restructure but provide new financing.

This system has broken down. In Zambia, Ghana, Sri Lanka, and Ethiopia — the four most prominent restructuring cases of the past four years — the sticking point has been China. Beijing's creditors operate under different mandates, different legal frameworks, and different political incentives than Paris Club members. China Export-Import Bank and China Development Bank are policy banks tasked with advancing Chinese foreign policy and commercial interests, not maximising immediate financial returns. They do not answer to the same shareholders as the World Bank or to the same legislatures as Western bilateral lenders.

In Zambia's case, the government and its advisers spent 28 months trying to reconcile Chinese demands with those of Eurobond holders and Paris Club creditors. China initially insisted that multilateral creditors — including the World Bank and IMF — participate in the restructuring, a demand inconsistent with decades of international practice. It then demanded that its claims be classified separately from other bilateral creditors, asserting that some Chinese loans were commercial in nature and should receive better treatment. When those positions became untenable, Chinese negotiators went silent for months at a time.

Ghana's restructuring, which began in December 2022, followed an almost identical pattern. The government reached agreement with the IMF in May 2023. Eurobond holders agreed to a restructuring in June 2024. But as of April 2026, final agreement with Chinese creditors remains unsigned, despite a memorandum of understanding reached in November 2024. The impasse has delayed disbursements under the IMF programme and forced Ghana to continue servicing debt at unsustainable levels while cutting capital expenditure by 34% in 2024 and 2025.

The Opacity Problem

A significant obstacle to restructuring is that many borrower governments — and their advisers, and the IMF — do not know the full extent of what they owe China. A 2023 study by AidData, the World Bank, the Harvard Kennedy School, and the Kiel Institute for the World Economy found that 44% of Chinese lending to developing countries is not reported in official statistics. The 'hidden debt' takes several forms: loans to state-owned enterprises that carry implicit or explicit government guarantees; commodity-backed financing arrangements where repayment is tied to future exports of oil, minerals, or agricultural products; and lending by Chinese commercial banks or provincial governments that is not captured in central government accounts.

Moreover, the loan contracts themselves frequently include confidentiality clauses that prohibit borrowers from disclosing terms without Chinese consent. A 2021 study by researchers at Georgetown, William & Mary, and the Peterson Institute examined 100 Chinese loan contracts with 24 countries and found confidentiality provisions in 75 of them. One-third of the contracts included provisions allowing Chinese creditors to demand immediate repayment if the borrower disclosed the loan to other creditors or international institutions without permission.

The lack of transparency creates a dual problem. First, borrower governments cannot negotiate effectively if they do not know what they owe or on what terms. Second, other creditors — commercial bondholders, Paris Club members, multilateral institutions — cannot assess whether a proposed restructuring is equitable if they cannot verify the baseline. This informational asymmetry gives Chinese creditors leverage in negotiations and delays resolution.

The Human Cost of Delay

While creditors negotiate, debtor countries continue to bleed. In Zambia, the delay in reaching an agreement meant that the government had to maintain debt service payments while simultaneously meeting IMF conditions for fiscal consolidation. Public sector wages were frozen in nominal terms from 2021 through 2023, a real-terms cut of 32% given inflation. Capital expenditure — roads, schools, clinics — was slashed by 47% from 2020 to 2023. The Ministry of Health's budget for antiretroviral drugs was cut by 18% in 2022, forcing rationing of HIV treatment in rural clinics.

In Sri Lanka, the economic collapse that preceded the default in April 2022 was the worst in the country's post-independence history. GDP contracted by 7.8% in 2022 and a further 2.3% in 2023. Inflation peaked at 69.8% in September 2022. The poverty rate, which had been 11.7% in 2019, reached 25.6% by the end of 2023 according to the World Bank. Hospitals ran out of essential medicines. Schools closed for lack of fuel. Power cuts lasted up to 13 hours a day.

Ghana's case illustrates how restructuring delays compound fiscal stress. Between December 2022, when Ghana announced it would seek restructuring, and June 2024, when Eurobond holders finally agreed to terms, the government was forced to continue paying debt service while implementing austerity measures required by the IMF. The education budget was cut by 12% in real terms. Teacher recruitment was frozen. The Road Fund, which finances maintenance of the country's highway network, saw its allocation reduced by 38%, accelerating the deterioration of transport infrastructure and increasing costs for farmers trying to bring crops to market.

What China Says

Chinese officials and policy bank executives argue that they are being unfairly blamed for a crisis they did not create. At the Paris Forum on Sovereign Debt in November 2025, Chinese Vice Finance Minister Liao Min pointed out that Chinese lenders have participated in the G20 Common Framework for debt treatment, that China has provided bilateral relief totalling $31 billion since 2020, and that Western commercial creditors and bondholders have been slower to agree to restructuring terms than Chinese policy banks in several cases.

Beijing also argues that multilateral creditors — the IMF, World Bank, and regional development banks — should not receive preferred creditor treatment that exempts them from restructuring. From China's perspective, those institutions lent alongside Chinese policy banks in many of the countries now in distress. If borrowers are insolvent, all creditors should share the burden. The fact that multilateral creditors are exempted because of institutional precedent and shareholder agreements does not, in Beijing's view, constitute a moral or economic justification.

There is also a domestic political dimension. Chinese policy banks ultimately answer to the State Council and, indirectly, to the Chinese public. The Belt and Road Initiative, once a showcase of Chinese global influence, has become politically controversial at home as losses mount. An analysis by the Boston University Global Development Policy Center found that as of December 2025, Chinese creditors had written off or restructured $75 billion in loans to Belt and Road countries. For Chinese officials negotiating restructurings, agreeing to haircuts without comparable treatment from other creditors risks domestic criticism that China is subsidising Western financial institutions and their shareholders.

The Systemic Risk

The failure of the current restructuring system is not merely an inconvenience for distressed sovereigns and their creditors. It poses a systemic risk. The IMF's April 2026 Fiscal Monitor identifies 34 low-income countries at high risk of debt distress and another 28 middle-income countries with elevated fiscal vulnerabilities. Many of those countries are heavily indebted to China. If restructuring remains slow, costly, and uncertain, countries will delay seeking help until crises become acute — as Sri Lanka did. That increases the ultimate cost to populations, to creditors, and to the stability of the international financial system.

Moreover, the breakdown of coordination is accelerating a fragmentation of global finance. Countries that cannot restructure on multilateral terms will increasingly turn to bilateral deals — with China, with Gulf creditors, with whoever offers an alternative. That undermines the role of multilateral institutions, reduces transparency, and makes future crises harder to resolve. A world where sovereign debt is bilateralised, where terms are secret, and where creditors coordinate only when forced to by default is a more unstable and more inequitable world.

The question is not whether China will remain a dominant creditor — it will. The question is whether the international community can build a restructuring framework that accommodates China's interests without paralysing crisis resolution. That will require concessions from all sides: China must accept greater transparency and comparability of treatment with other bilateral creditors. Western creditors and bondholders must accept that China will not agree to haircuts that exempt multilateral institutions without political concessions. And multilateral institutions must accept that their preferred creditor status, long taken for granted, is no longer politically or financially sustainable in a world where a single non-Western creditor holds claims comparable to their own.

The Path Forward

There are reforms that could reduce restructuring delays without requiring multilateral treaty renegotiation. The G20 could mandate debt data transparency as a condition for participation in the Common Framework, requiring all bilateral creditors — including China — to disclose loan terms to borrower governments and their advisers under confidentiality agreements. The IMF could develop standardised protocols for classifying creditors and determining comparability of treatment, reducing the scope for prolonged negotiations over definitional issues. Multilateral development banks could offer partial guarantees on restructured debt to China and other bilateral creditors, providing downside protection that makes agreement more attractive.

None of these reforms will happen without political will. Western governments have been reluctant to pressure China too aggressively on debt transparency, fearing retaliation in other areas of economic diplomacy. Multilateral institutions have been slow to reform their own practices, unwilling to cede the advantages of preferred creditor status. And debtor countries, desperate for continued access to financing, are often unwilling to antagonise their largest creditor by demanding disclosure.

In the meantime, the cost is being paid by populations that had no say in the borrowing decisions that created the debt, no access to the infrastructure those loans financed, and no recourse as their governments cut healthcare, education, and public investment to service obligations they cannot afford. The data is unambiguous: the system is broken. What remains unclear is whether anyone with the power to fix it is willing to try.