Nearly all ex-allies paying back Taiwan loans: MOFA

Taipei, Feb. 20 (CNA) All of the Republic of China's (ROC) former diplomatic allies, apart from two African states, are repaying loans owed to Taiwanese banks in accordance with their contracts, the Ministry of Foreign Affairs (MOFA) said Tuesday.

MOFA spokesman Jeff Liu (劉永健) said all funds loaned to former allies were done as part of commercial agreements with Taiwanese banks and that MOFA had only been the facilitator.

Like all commercial loans, the contracts stated the rights and responsibilities of both parties, including dispute settlement mechanisms, according to Liu.

The ending of diplomatic ties does not affect the validity of these contracts, so the former allies still have to repay the loans, he said, citing information given by Taiwanese banks.

Almost all of these former allied countries have been doing so accordingly, including Honduras, with only two exceptions -- the Central African Republic (CAR) and the Democratic Republic of Congo (DRC), Liu said.

If a breach of contract occurs, banks can use international judicial channels to take legal action, a standard practice when disputes arise regarding commercial loans, Liu said.

Liu added that this was why a Taiwanese bank had filed and won a lawsuit against the two countries.

Liu was referring to an April 2017 ruling that saw the state-run Taiwanese bank, the Export-Import Bank of the Republic of China, successfully sue the two African countries for US$212 million in unpaid loans allocated while the ROC, Taiwan's formal designation, still had diplomatic relations with them.

However, the two subsequently failed to begin repayments and the Taiwanese bank is currently investigating other methods to recover assets, according to MOFA.

The ROC ended diplomatic ties with the DRC in 1973 and the CAR in 1998.

Liu made the remarks during a MOFA briefing when he was asked to comment on a Honduran media report released last week that said the Central American country still owed Taiwanese banks US$449 million despite the ending of 80-plus years of diplomatic ties.

The funds from Taiwan were allocated for housing reconstruction, school infrastructure, school meals, and other projects, according to the Spanish language newspaper La Prensa.