A new report by the IMF and World Bank, obtained by Reuters, shows China is by far the largest of the six new creditor nations it has identified.

Kuwait, Brazil, India, South Korea and Saudi Arabia are the others.

The institutions regularly evaluate the so-called Debt Sustainability Framework, which is used to assess whether borrowing countries are amassing a troublesome level of debt.

However, this year's review comes amid concerns by the United States and other developed countries that African nations whose debts have been written off by the international community are taking on excessive new burdens.

The worry has been fuelled by the surge in Chinese investments in Africa, mainly in oil and natural resource businesses, and increased interests by export credit agencies and commercial banks in countries with less debt.

According to the report, China was by far the largest creditor in the group, with claims of US$5 billion at the end of 2004, double the level of 10 years earlier.

Kuwait, the second-large creditor in 2004, had claims of US$2,5 billion.

Those numbers likely have risen significantly since then, the report said, but it acknowledged the hard evidence was still lacking.

"Although precise data are not yet available, there is evidence that lending by emerging creditors and particularly China has increased very sharply in 2005 and 2006," the report said.

The report also acknowledged that the terms on the loans extended by the new group of emerging creditors to poor countries is not well known.

"Many have nontraditional financial structures, including implicit or explicit collateralisation, foreign exchange clauses, and variable fees, that hamper the assessment of their impact on debt sustainability," the report added.

"Given the size of these loans, more extensive information from creditors on their modalities and the terms of their lending to (low-income countries) would enhance the quality" of assessing the debt, the report added.

The IMF and World Bank have called on these emerging lenders to share the terms of their agreements with the rest of the donor community.

The current lack of transparency is making Western donors uneasy, given they have written off billions of dollars in debts of the world poorest countries.

The United States has urged action to stop an "irresponsible" new wave of lending, which it fears could undermine efforts to improve economic management in Africa and root out corruption.

The economies of more than a dozen African countries are growing by more than five per cent a year, but still find traditional lenders unable to meeting all their financing needs for development.

Debt cancellation has put some countries' debt levels well below IMF-World Bank debt sustainability thresholds, which could increase their appetite for new loans, the report said.

While the increased investment in poor countries has been welcomed by the fund and the bank, their experts say it is important the investments are properly targeted.

The report said there was scope to expand how the Debt Sustainability Framework is used to assess and monitor the debt burdens of countries, including by improving how the potential risks of new debt accumulation are weighed.

The report said the increase in volume and sources of funds available to poor countries could burden countries with market interest rates and short maturities they cannot afford.

New loans from a single creditor may sometimes represent a large share of the size of a recipient's economy, raising concerns about the prospects of a default.

Nampa-Reuters

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