Western countries have sharply criticized China for being the main reason for the lack of progress in restructuring the debts of a growing number of countries that are unable to pay their debts.
“Rising inflation, tightening monetary policy, currency pressures and capital outflows abroad are adding to the debt burden in many emerging markets,” US Treasury Secretary Janet Yellen said yesterday (Saturday), emphasizing the urgent need for further progress.
He explained that these issues were discussed at a dinner with finance ministers of African countries and many other meetings. Officials from G7 countries met with finance ministers from African countries who were concerned that the focus on the war in Ukraine was draining resources and diverting attention from Ukraine’s pressing problems.
“Everyone agrees that Russia’s war against Ukraine must end and that stopping that war will solve the most important of the problems facing Africa,” Yellen told reporters at the annual meetings of the International Monetary Fund (IMF) and the World Bank in Washington.
She also emphasized the need for a more effective debt restructuring process. Yellen emphasized that China is an important player in this regard.
She said that the obstacle to progress on debt restructuring is China, which is one of the major lenders. “So there have been a lot of conversations about what we can do to bring China to the negotiating table and encourage a more effective resolution,” she said.
Zambia, Chad and Ethiopia have applied for debt restructuring under this new and untested mechanism.
Sri Lanka was agreed to start bilateral talks with creditors, including China, after reaching a staff-level agreement with the International Monetary Fund worth 2.9 billion.
The World Bank said the world’s poorest countries face $35 billion in debt due to official creditors and the private sector in 2022. 40 percent of these countries’ debts are due to China.
