Leading economies must move faster to solve debt crises - U.S. Treasury Secretary

by Staff Writer 23-02-2023 | 3:32 PM

COLOMBO (News 1st); U.S. Treasury Secretary Janet Yellen is urging other leading economies to move faster in resolving debt crises that threaten a growing number of countries.

Yellen made the comments in a meeting Thursday with India’s finance minister, Nirmala Sitharaman, on the sidelines of a meeting of financial leaders of the Group of 20 major economies, the Treasury Department said in a statement.

U.S. Treasury Secretary Janet Yellen and other officials earlier indicated they will also be discussing risks of heavy debt burdens for many countries after costly efforts to cushion the worst impacts of the COVID-19 pandemic. Those woes have deepened as countries’ import bills surged due to sustained higher prices for food, oil and fertilizers and weakening currencies.

But a slew of other countries, from Laos and Afghanistan to Venezuela and Argentina, have seen their finances deteriorate in the past year.

China has expressed support for Sri Lanka but has not said if it will help reduce a multibillion-dollar debt that has left the Indian Ocean nation in financial and political turmoil.

One of Sri Lanka’s biggest creditors after extending it loans to build a port and other facilities, Beijing has offered a two-year suspension of repayments but balked at reducing the amount owed.

The International Monetary Fund has set a reduction in debt as a condition for an emergency loan.

The 1st G20 FMCBG meeting under the G20 Indian Presidency on 24th-25th February will see the participation of Finance Ministers and Central Bank Governors of the G20 members, invitee members and heads of International Organisations. In total, there will be 72 delegations attending the meeting.

Sri Lankan President Ranil Wickremesinghe is expected to meet the Chinese finance minister at the G20 Finance Ministers and Central Bank Governors (FMCBG) meeting this week to discuss the debt restructuring method of Sri Lanka .

On Tuesday (21), he emphasised that seeking the IMF bailout package was the only option available to the debt-ridden country to overcome the ongoing economic crisis.

Wickremesinghe acknowledged that delays over Chinese willingness to restructure Sri Lanka debt had caused problems.

The Export-Import Bank of China has provided Sri Lanka with a debt extension, China's Foreign Ministry said on Monday, noting that China is willing to negotiate a medium- and long-term debt disposal plan with the country in a friendly manner, and do its best to promote Sri Lanka's debt sustainability.

The remarks come as Bloomberg reported that the International Monetary Fund (IMF) is considering approving Sri Lanka's bailout, even without the formal assurance of debt-restructuring support from China, citing people familiar with the discussions.

In response, Wang Wenbin, spokesperson for the Chinese Foreign Ministry, told a press conference on Monday that China has already provided Sri Lanka with a letter supporting the sustainability of Sri Lanka's debt, expressing its willingness to extend the debt due in 2022 and 2023.