As dominant creditor, China must ‘step up’ on debt restructuring, Indonesias Indrawati says

div classBodysc17zpet90 cdBBJodivpBy Andrea Shalal and David Lawderp

pWASHINGTON Reuters – As the world‘s dominant creditor, China and must demonstrate leadership in addressing the growing debt problem facing many lowincome and emerging market countries around the world, this year’s leader of the Group of 20 finance officials told Reuters.pdivdivdiv classBodysc17zpet90 cdBBJodiv

pIndonesian Finance Minister Sri Mulyani Indrawati, speaking in an interview on Friday, welcomed news that China would join a creditor committee for Zambia, one of three countries that has sought debt relief under the G20 Common Framework agreed with the Paris Club of official creditors.p

pIndrawati said there was still work to do to move forward with Zambias longstalled debt process, and other countries would also need debt relief and restructuring in the future.p

p“There will more cases coming,” Indrawati said. “At some point China has to recognize that they need to step up to actually take that kind of leap, and providing the platform for all creditors to be able to discuss … how this restructuring is going to be real.”p

pInternational Monetary Fund Managing Director Kristalina Georgieva on Thursday said China had committed to joining Zambia‘s creditor committee amid complaints from Zambia’s finance minister about delays to its debt restructuring.p

pZambia became the first COVID19 pandemicera default in 2020 and is buckling under a debt burden of almost 32 billion, around 120 of its gross domestic product.p

pGeorgieva, U.S. Treasury Secretary Janet Yellen and others have called for moves to accelerate the debt restructuring process and make it more efficient.p

pEthiopia and Chad also signed up to the Common Framework more than a year ago and have yet to receive debt relief.p

pChina, which has become the worlds largest creditor, has been reluctant to move forward with restructuring deals, according to Western officials.p

pIndrawati said G20 members made clear their concerns about the need to jumpstart the slowmoving debt restructuring process during this weeks spring meetings of the IMF and World Bank members, with some 60 of lowincome countries now in or at high risk of debt distress.p

p“After a lot of the discussion, especially about the role of China, in the end they agreed to make the creditor committee,” Indrawati said. “Thats progress.” p

p“Because they are becoming very important and dominant, they also need to have the ownership as well as leadership on how this kind of situation needs to be solved,” she added.p

pIndrawati said the Paris Club could provide a reference, but it was up to current creditors – including China – to agree on how to treat countries that can no longer service their debts. She said she was optimistic that G20 members would make progress on adjusting the Common Framework to become more effective over the course of the year. p

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pp Reporting by Andrea Shalal and David Lawder Editing by Will Dunhamp

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