UK to Boost Investment in Lower Income Countries in Risk of ‘Unsustainable Debt’

Foreign Secretary Liz Truss during her speech at the Conservative Party Conference in Manchester, England, on Oct. 3, 2021. Stefan Rousseau/PA

The Chinese regime’s “Belt and Road” Initiative is expected to meet some competition as the UK revamps a development finance institution to boost investment in the Caribbean, Asia, and Africa.

British Foreign, Commonwealth, and Development Secretary Liz Truss said “reliable and honest sources of finance” from “freedom-loving democracies” are needed as “too many countries are loading their balance sheets with unsustainable debt.”

Truss on Thursday launched the British International Investment (BII), which “will invest billions in infrastructure and technology in low and middle-income countries across Asia, Africa, and the Caribbean,”  the Foreign Office said in a statement.

It added that the body, previously known as the Commonwealth Development Corporation Group (CDC), will be a key part of the government’s plans to mobilise up to £8 billion ($10.67 billion) a year of public and private sector investment in international projects by 2025.

“This will include BII partnering with capital markets and sovereign wealth funds to scale up financing and help the private sector move in,” the statement read.

BII will also help create markets for digital infrastructure, technology, and renewable energy, which can utilise UK expertise.

Truss said the new project will benefit Britain by creating jobs and opportunities for the British people, as well as helping grow economies across Asia, Africa, and the Caribbean while drawing them closer to free-market democracies.

The BII is expected to prioritise infrastructure investment in low and middle-income countries, providing them with “clean, honest, and reliable financing.”

In an interview with Financial Times, the foreign secretary said the idea is about giving countries “alternatives” to falling into “strings-attached debt from autocratic regimes” and non-market economies.

“We want to build a network of liberty around the world with our friends and partners. That involves closer economic partnerships. It’s a positive agenda. It’s not a confrontational agenda,” she told the newspaper.

Ranil Dissanayake, a policy fellow at the Center for Global Development think-tank, said it’s a good thing to invest in developing countries, but questioned whether the size of the project can measure up to the Belt and Road Initiative.

“The most valuable part of this idea is the concept of the UK acting as a catalyst to encourage private sector investment and drive down the cost of new technologies. It is through this that British innovation could indeed compete with the brute force financing methods of China,” he told the Financial Times.

Diana Layfield Google president of EMEA partnerships was appointed as the new chair of the revamped finance institution.