Tanzania and Kenya will be excluded from China’s debt relief program.

Tanzania may join Kenya on a list of countries that will be excluded from the Chinese debt relief arrangement at the end of this year due to their lower-middle-income status, despite the fact that the East African states face an increasing debt load.

Wang Yi, China’s Foreign Minister, declared that the world’s second-largest economy would cancel 23 matured interest-free loans for 17 unnamed African states categorized as least developed countries (LDC).

Kenya, which is suffering from a debt of over Ksh8.6 trillion ($72.26 billion), was left out of the agreement last week, according to Chinese officials in Nairobi.

Tanzania likewise moved from the low-income to the lower-middle-income category in July 2020, after more than 20 years of continuous economic progress.

LDCs include Uganda, Rwanda, and Burundi. According to the World Bank, Tanzania’s national poverty rate reduced from 34.4 to 26.4 percent between 2007 and 2018, while the severe poverty percentage fell from 12 to 8%.

Kenya entered the world’s lower-middle-income countries in 2014, having surpassed the UN’s $1,045 GDP per capita criteria after rebasing its economy.

Beijing announced the new debt relief scheme on August 18 at the Forum on China-Africa Cooperation, as part of its efforts to strengthen ties with its African partners.

According to the IMF, China has become the biggest official bilateral creditor in more than half of the Debt Service Suspension Initiative (DSSI) nations, and will therefore play an important role in debt restructuring for those economies.

Approximately 60% of the 73 nations eligible for DSSI are at high risk of or are currently in financial trouble.

Around 20 additional nations have shown major violations of relevant high-risk criteria in 2022, with half of them either having inadequate reserves, growing gross finance requirements, or a combination of the two.

Beijing has increased its involvement with Africa via infrastructure development and sustainable energy collaboration. In 2021, China will have funded or completed half of the building projects in East Africa.

President Xi Jinping presented the Global Development Initiative and said that China would rename the South-South Cooperation Assistance Fund the Global Development and South-South Cooperation Fund and refill it.

China has begun establishing a pool of global development projects, with a particular focus on African nations with potential initiatives.

Over the last two decades, the Forum on China-Africa Collaboration (FOCAC) mechanism has played an important role in charting the appropriate way for international cooperation with Africa.