WASHINGTON: US Treasury Secretary Janet Yellen said China needs to do more to accelerate global efforts to provide debt relief for poor nations that ramped up borrowing during the pandemic.
In an interview with AFP, Yellen acknowledged the Group of 20’s initiative to help debtor nations “has not been going very rapidly,” and the United States “would hope to see more active participation” from China.
Yellen will participate virtually in the meeting of G20 finance ministers and central bankers in Jakarta Thursday and Friday, where growing concerns about the economic prospects of developing nations will be a central issue.
During the Covid-19 pandemic, the G20 put in place the Debt Service Suspension Initiative to help countries that borrowed heavily to deal with the twin health and economic crises, but that program ended in December.
The G20 last year adopted the Common Framework plan meant to offer a path to restructure large debt loads, but it remains subject to uncertainty, and only three countries — Chad, Ethiopia and Zambia — have requested a negotiation under its terms.
The World Bank and IMF have each warned of dire consequences unless more nations are granted forbearance.
A key hurdle is the lack of information on the size of debt owed to China, as well as some other lenders, by private companies as well as governments.
While countries like China “have agreed to participate in the initiative,” Yellen said, “we certainly need to move more expeditiously than we have... to facilitate faster and more effective relief of debt through the common framework.”
China on Thursday defended the country’s participation, saying Beijing “comprehensively implements the Debt Service Suspension Initiative” and takes steps to “play a positive role in relieving the relevant countries’ debt burdens.”
Foreign ministry spokesman Wang Wenbin pointed instead at creditors from developed countries as well as multilateral organizations, which he said “have a greater responsibility to help developing countries reduce their debt burden.”
Yellen told AFP G20 finance officials this week also will continue to work on strategies to help countries deal with the pandemic, “which continues to be a major problem in many parts of the world.”
“We’ll certainly focus on the need to help low-income economies and debt-ridden economies that are especially pressed because of the pandemic, (and on) how to facilitate faster and more effective relief of debt through the common framework,” Yellen said.
The G20 also is working on boosting financing mechanisms through the IMF and World Bank, channeling resources to trust funds to satisfy immediate needs like vaccine distribution and broader efforts to prevent future pandemics, as well as to deal with climate issues, she said.
Yellen added that the officials will continue discussions on implementing a 15-percent global minimum corporate tax to “try to keep the momentum going.”
She said G20 countries need to make more progress on the domestic steps needed to implement the tax on “highly profitable, multinational corporations.”
In the United States, those steps were included in President Joe Biden’s Build Back Better legislative package, which opposition Republicans have blocked in the Senate.
Yellen said the tax language in the bill was “widely agreed upon,” and would provide funds to pay for other priorities, and she is “confident there will be some legislation later this year.”