U.S. Treasury Secretary Henry Paulson warned Monday against irresponsible borrowing or lending involving countries that have received debt relief.
While many highly indebted countries in Africa have had their loans forgiven by Western governments and donor agencies, they say that the flow of fresh aid and loans has been slow. Increasingly, African nations are turning to China, which has been strengthening its ties to Africa through investments, loans and political overtures.
The World Bank has expressed concern about such loans, especially for projects it worries might not boost development.
Paulson did not single out any specific countries in his comments to the World Bank's policy-setting committee, but he stressed that it was important to find ways to keep countries from falling back into debt.
"We need to develop an approach that prevents a re-emergence of debt distress," Paulson said in a statement to the development committee of the World Bank. "We need effective incentives or penalties to deter irresponsible borrowing or lending."
"We are already receiving anecdotal evidence of creditors providing large loans, the terms of which are unknown, to countries that have recently received debt relief," Paulson said.
African finance ministers have said they are turning to China because the World Bank and other donors have been slow to deliver aid. They have also said that World Bank funds are linked to numerous conditions, such as fiscal reforms and steps to privatize the economy, which recipient countries say cause delays.
Additional aid and loans have come "far too slowly and the conditions are far too many," Senegalese Economy Minister Abdoulaye Diop said Sunday.
New money is needed to invest in infrastructure building and development projects, John Benjamin, finance minister of Sierra Leone, whose country has seen its infrastructure destroyed by war, the AP says.
The ministers were attending the World Bank and International Monetary Fund's annual meetings held here.
Paulson, the former head of Goldman Sachs who took over the top Treasury job in July, is scheduled to visit China this week for four days for talks with top leaders there on its economic relationship with the U.S.