IMF missteps over huge China deal in the Congo proves costly
In 2007 when China's Exim Bank unveiled a massive $6 billion mining deal in the Democratic Republic of the Congo, it completely rocked the normally-staid world of international development finance. The agreement, known as "The China Deal" or Sicomines, was among the first of these huge Chinese infrastructure-for-resources deals that are now commonplace across Africa. Ten years ago, though, the World Bank and the International Monetary Fund were pretty much the only players that threw around that kind of cash in countries like the DRC. So when the Chinese came along with the Sicomines deal, many observers saw it as a direct challenge to the IMF's once unrivaled dominance of international development finance in places like the Congo. While a feared Chinese-IMF rivalry did not ultimately materialize, "The China Deal" did create a lot of problems. The IMF responded defensively, according to new research from Sino-Congolese scholar Dr. Johanna Malm at Roskilde University in Denmark. Fearing they might be pushed aside by the Chinese, the IMF opted to make it easier for the Congolese government to borrow yet more money, adding to Kinshasa's already dangerously-high debt load. Dr. Malm joins Eric a Cobus to discuss "The China Deal" and why the IMF's missteps in the Congo produced costly-consequences for an already financially-distressed government.