US Treasury Secretary Janet Yellen has accused China of obstructing international efforts to provide debt relief to these countries, especially those on the African continent.
“The obstacle to greater progress is a major creditor country, namely China”declared the Minister of Economy and Finance of Joe Biden, on October 14 during a press conference at the headquarters of the International Monetary Fund (IMF), in Washington.
“So there’s been a lot of discussion regarding what we can do to bring China to the table and foster a more effective resolution of these issues.”, she clarified. This statement comes as recent meetings of the IMF and World Bank, as well as those of the G7 and G20 Finance have come to an end.
The IMF and the World Bank have asked China, the world’s largest creditor, to engage in the restructuring of the debt of poor and developing countries through the common negotiation framework set up by the G20.
Or, “very few countries” request that their debt be treated within the common framework of the IMF, indicated the Minister, during a meeting with her counterparts from the countries of the euro zone.
Of those who did, “China is an important factor explaining why it does not work” and Beijing “does not participate constructively”she assured.
Read also: Private Western lenders are the source of African debt
The economic damage caused by the Covid-19 pandemic has led many countries to have to borrow even more, while their over-indebtedness situations were already alarming. Added to this is the rise in interest rates which should make it possible to curb inflation.
“The situation in African countries and other developing countries “is extremely worrying”, underlined the Secretary of the Treasury. “Debt problems are becoming more and more acute for African countries”assured Janet Yellen, who recognized “the importance of making progress towards having a better and more effective framework for resolving over-indebtedness”.
The total stock of Chinese official loans is valued at between $500 billion and $1 trillion, concentrated in low- and middle-income countries, and “no less than 44 countries now owe debt equivalent to more than 10% of their GDP to Chinese lenders”said an adviser to Janet Yellen at the end of September.
Read also : An adviser to Janet Yellen criticizes China’s debt practices.
In August, the Chinese Foreign Minister, Wang Yi, pledged significant debt relief for some of the world’s poorest countries at the Ministerial Meeting of the Forum for China-Africa Cooperation.
In addition to increasing food aid provided to the African continent, Wang Yi pledged to no longer demand the repayment of concessional loans that had recently expired, but which 17 African states had been unable to repay.
The outstanding balance of unpaid loans granted mainly by the Chinese Ministry of Commerce (or by the Export and Import Bank of China) should therefore be cancelled.
Feature image: US Treasury Department
