Global Courant 2023-04-11 13:57:30
A record number of developing countries are at risk of a debt crisis, with rising inflation driving up borrowing costs.
U.S. Treasury Secretary Janet Yellen will this week push for a speedy resolution of requests from Zambia and Ghana to restructure their sovereign debts, and take steps to finalize debt treatment for Sri Lanka, the Treasury Department said Monday .
Yellen, who will meet with counterparts from around the world at World Bank and International Monetary Fund (IMF) meetings this week, is also pushing for concrete steps to speed up the overall debt relief process and make it more predictable, Treasury Secretary Jay said. Shambaugh.
“Throughout the week, Secretary Yellen … will maintain the urgency for rapid resolution of Common Framework cases such as Zambia and Ghana to remove debt overhangs and promote growth in developing countries,” the statement said.
Sri Lanka, Zambia and Ghana have already defaulted on their external debts and are working with creditors to restructure debts. About 60 percent of low-income countries are in or near debt distress, but the Group of 20 (G20) common framework set up to help low-income countries has failed to deliver rapid debt relief.
“At a broad level, we’re really just striving to improve the speed and predictability of this framework,” Shambaugh said at an event hosted by the Brookings Institution think tank. “This requires the constructive and timely participation of all creditors in international debt restructuring discussions.”
Shambaugh said the Treasury’s immediate priority was to resolve outstanding requests from Zambia, Ghana and Ethiopia under the G20, and Sri Lanka, which is working on a separate debt plan because it is a middle-income country.
He said Washington was pushing for “coordinated action” to deal with Zambia’s debt and the formation of a creditors’ committee for Ghana in the coming month, adding that the world’s two largest economies – the US and China – should work together to deal with this. to face challenges.
“During these meetings, we will work very hard to speed up this process, make it more transparent and function better,” he said, adding that progress has been “slower than we would like”.
A senior finance official said it is up to China whether Zambia’s case can be resolved this week.
Yellen and other G7 officials have long criticized China’s slow progress on specific G20 debt-handling matters, though they welcome China’s agreement to provide financing guarantees to Sri Lanka, which paved the way for an IMF loan package.
Debt round table
Yellen will discuss the debt issue in separate meetings Wednesday with officials from the G20 and the Global Sovereign Debt Roundtable, which includes debtor countries, the Treasury Department said.
Sources familiar with the matter said the co-chairs of the round table — the IMF, the World Bank and India as the current G20 president — planned to issue a statement after Wednesday’s meeting.
A record number of developing countries are at risk of a debt crisis, with rising inflation driving up borrowing costs and a strong dollar driving up the cost for borrowing countries to repay loans and raise more money.
IMF Director Kristalina Georgieva also took aim at China last week, saying she had told the country’s new top economic leader that Beijing needed to “speed up” its work on debt restructuring requests.
World Bank chief David Malpass said on Monday he hoped meetings with Chinese officials this week could help “break the ice” on much-needed debt relief for poor countries.
Yellen has no formal meetings with Chinese counterparts on her schedule, but the US official said officials from the Biden administration and China will continue dialogue “where we can”.
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