As the initial repayment phase of the Belt and Road Initiative (BRI) begins, a significant shift in development finance is reshaping Asia. Developing nations are currently facing approximately $400 billion in external debt payments this year, a burden compounded by rising interest rates and public debt levels reaching their highest point since World War II. Amid these pressures, the Borrowers’ Platform, established in April with the UN Trade and Development (UNCTAD) acting as its secretariat, held its inaugural Governing Council on October 12 in Bangkok to coordinate collective positions for global debt discussions.
The financial landscape of the 2010s, characterized by aggressive Chinese lending, has fundamentally changed. Data indicates that China’s net flows to developing countries dropped to a negative $34 billion in 2024. The number of nations for which China acts as a net drain on capital increased from 18 in 2012 to 60 in 2023, with an estimated $35 billion in debt service expected to flow to Beijing in 2025 alone. While China continues to provide liquidity through loan rollovers, swap lines, and repayment deferrals, its role has shifted away from funding new infrastructure projects.
In contrast, multilateral institutions such as the World Bank and the Asian Development Bank (ADB) are becoming the primary sources of new capital. The World Bank reported record net flows of $36 billion to low- and middle-income countries in 2024, with multilateral creditors providing nearly half of all long-term net financing. Bilateral net flows, by contrast, fell to about $4.5 billion, the lowest since the global financial crisis. This transition is evident in Pakistan, Sri Lanka, and Laos.
Pakistan, for example, is navigating a complex fiscal environment where it must secure approximately $12 billion in rollovers from China and Saudi Arabia for the current fiscal year. In July 2026, Islamabad paid $1.3 billion in Chinese commercial loans. Simultaneously, the World Bank has committed to a 10-year partnership with Pakistan, envisaging about $20 billion in financing over 2026-35. A notable shift occurred with the Main Line-1 railway project; after failing to secure a Chinese concessional package, the Karachi-Rohri section will now proceed with $1.1 billion in proposed ADB financing, a sequencing the government says was agreed with Beijing.
Sri Lanka, having signed agreements in June 2024 to restructure about $4.2 billion in debt owed to China’s Export-Import Bank, is now heavily dependent on multilateral liquidity. In 2025, the IMF and ADB together provided nearly 80 percent of the roughly $1.48 billion in foreign development financing disbursed to Colombo, and the ADB has since raised its 2026 allocation to US$480 million following Cyclone Ditwah. Meanwhile, Laos remains in a state of high reliance on Beijing, having secured $3.23 billion in deferrals since 2020, which accounts for about 19 percent of its GDP. With debt service projected to reach 13 percent of its GDP in 2026, Vientiane faces limited fiscal space for social spending.
While multilateral loans are earmarked for specific projects like railways or disaster recovery, money is fungible at the budget level. Every dollar that a development bank finances frees up domestic revenue or foreign reserves that can be used to service bilateral debt. Consequently, fresh multilateral finance may be expanding investment capacity on paper while, in practice, buying fiscal breathing room to meet legacy Chinese obligations. The success of this transition for Asian borrowers will depend on their ability to track net financial flows and maintain fiscal space for future development.
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A more diverse creditor base can strengthen a borrower’s hand, since multilateral lending brings concessional terms, competitive procurement, and greater transparency, and credible alternatives are themselves a source of leverage when negotiating with several creditors at once. Yet the shift carries costs of its own.
