Treasury Secretary Janet L. Yellen called on Sunday for international creditors to speed up their efforts to provide debt relief to developing countries facing default, arguing that shoring up their deteriorating finances would benefit the global economy.
Speaking in Gandhinagar, India, ahead of a gathering of finance ministers from the Group of 20 nations, Ms. Yellen cited a recent agreement among international creditors, including China, to help Zambia pay its debts. She said that the agreement, which took more than a year to negotiate, should be a blueprint to use in helping other nations, such as Ghana and Sri Lanka, to accelerate debt relief and restore growth.
“We should apply the common principles we agreed to in Zambia’s case in other cases rather than starting at zero every time,” Ms. Yellen said. “And we must go faster.”
The Treasury secretary noted that more than half of low-income countries are in or near debt distress — double the total from 2015. These nations face a vicious cycle, because heavy public debt levels make it hard to attract public and private investment.
“When these countries develop and contribute to the global economy, all of us benefit,” Ms. Yellen said.
Last month, the government of Zambia hailed an agreement securing a three-year reprieve on payments for $6.3 billion in debt, the bulk of it to Chinese lenders. That cleared the way for the I.M.F. to release $188 million in relief funds under a $1.3 billion rescue package. The arrangement came only after a year and a half of torturous negotiations that left Zambia’s finances in a precarious state.
Ms. Yellen said she would urge her G20 counterparts to accelerate efforts to allow poor countries to restructure their debt and to provide more clarity for borrowers about how the restructuring should work.
Her trip to India comes less than a week after she returned from Beijing, where she held meetings with senior Chinese officials about how to stabilize the relationship between the United States and China.
Beyond debt distress, finance ministers are expected to discuss international efforts to modernize the World Bank and other regional development banks.
Finance ministers are expected to continue discussing international support for Ukraine, which has been a contentious issue within the G20. Russia is a member of the group, and several countries, including India, have tried to remain neutral in the conflict.
In her remarks on Sunday, Ms. Yellen made clear that the United States and its Western allies have no intention of scaling back support for Ukraine.
“Our coalition’s support for Ukraine is unequivocal,” Ms. Yellen said. “The United States will stand with Ukraine for as long as it takes. And I know the allies and partners in our coalition will do so as well.”
Alan Rappeport is an economic policy reporter, based in Washington. He covers the Treasury Department and writes about taxes, trade and fiscal matters. He previously worked for The Financial Times and The Economist. More about Alan Rappeport
Source: Read Full Article