Treasury Secretary Janet L. Yellen Urges Debt Relief for Developing Countries
Treasury Secretary Janet L. Yellen has called on international creditors to expedite their efforts in providing debt relief to developing countries on the brink of default. Yellen stated that bolstering the deteriorating finances of these nations would ultimately benefit the global economy.
Speaking in Gandhinagar, India, ahead of a meeting with finance ministers from the Group of 20 nations, Yellen highlighted the recent agreement among international creditors, including China, to assist Zambia in paying off its debts. She argued that this agreement, which took over a year to negotiate, should serve as a blueprint for other countries, such as Ghana and Sri Lanka, to accelerate debt relief and restore economic growth.
Rather than starting from scratch with each case, Yellen emphasized the need to apply the common principles established in Zambia’s case to other nations. She stressed the urgency in speeding up the debt relief process.
Yellen noted that more than half of low-income countries currently face or are in close proximity to debt distress, representing twice the number from 2015. These nations are caught in a vicious cycle as excessive public debt hinders their ability to attract both public and private investments.
Ms. Yellen stated, “When these countries develop and contribute to the global economy, all of us benefit.”
Last month, the Zambian government celebrated an agreement that provided a three-year deferment on payments for $6.3 billion in debt, a majority of which was owed to Chinese lenders. As a result, the International Monetary Fund (IMF) could release $188 million in relief funds from a $1.3 billion rescue package. However, the negotiations leading to this agreement were strenuous, leaving Zambia’s finances in a precarious state.
Yellen intends to encourage her G20 counterparts to expedite efforts in allowing impoverished nations to restructure their debt. She also aims to provide borrowers with more clarity on how the restructuring process should unfold.
This visit to India comes shortly after Yellen’s meetings with senior Chinese officials in Beijing, where discussions revolved around stabilizing the US-China relationship.
In addition to debt distress, finance ministers are expected to address international initiatives aimed at modernizing the World Bank and other regional development banks.
Furthermore, discussions revolving around international support for Ukraine are anticipated, a topic that has caused divisions within the G20. Russia, a member of the group, has triggered tension, prompting several countries, including India, to remain neutral in the conflict.
During her address, Yellen underscored that the United States and its Western allies have no intentions of reducing their support for Ukraine. She emphasized, “Our coalition’s support for Ukraine is unequivocal. 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.”