SHANGHAI: Like Sri Lanka, Kyrgyzstan also has a swelling state debt and took on billions worth of loans over the last decade from China’s Export-Import Bank for a series of infrastructure plans under the Belt and Road Initiative (BRI), Chinese leader Xi Jinping’s signature policy, which he once dubbed “the project of the century”, media reports said. Kyrgyzstan’s debt currently sits north of $5.1 billion, according to the Foreign Ministry, 42 per cent of which is owed to Beijing. But Bishkek is struggling to cope with a contracting economy and has so far failed to yield a commercial return on the projects backed by its huge Chinese loans. This has prompted fears the country will be unable to pay off its loans or even meet interest payments. The mounting financial pressure has also raised concerns that the country may have to hand over lucrative assets if it fails to meet its repayment obligations.

That warning comes as sovereign-debt distress spreads in several countries along the BRI, prompting China’s first overseas debt crisis as it grapples with a mounting pile of non-performing loans and increased scrutiny of how Chinese lending has exacerbated economic pressures on vulnerable governments, RFE/RL reported. “There’s no doubt that the Chinese Ministry of Finance and central bank are looking at their dashboards and their red lights are going off right now,” Bradley Parks, Executive Director of the AidData Lab at the College of William and Mary in Virginia, told RFE/RL.

The globe-spanning scale of BRI, which was launched in 2013 by Beijing as the largest infrastructure program undertaken by a single country, has left it with a list of risky debtors around the world—including Argentina, Pakistan, Russia, Tajikistan, Venezuela, Zambia, and Iran—that hoped to take advantage of the surge in Chinese overseas lending but now find themselves struggling with a debt crisis the World Bank has warned could trigger a series of defaults not seen since the 1980s.