LNP – China confirms attendance at IMF’s first-ever creditor-debtor roundtable in India
The nations that are in debt with the People’s Republic of China will have the opportunity to negotiate firsthand the debt restructuring agenda, as the world’s second largest economy has confirmed its attendance at the first-ever creditor-debtor roundtable organised by the International Monetary Fund (IMF).
IMF Managing Director Kristalina Georgieva shared earlier this week that China would be at the meeting and would be participating at the level of minister of finance and governor of People’s Bank of China.
The meeting is scheduled to be held in Bangalore, India, towards the end of February.
China is the biggest creditor to the majority of the developing nations that are struggling to pay back the high level of debt, as they have witnessed steep depreciations of their local currencies.
China has handed out a trillion dollars in loans to almost 150 countries to build roads, ports, amongst others. Sri Lanka is one of the recipients looking for its external debt to be restructured to unlock the much-awaited IMF bailout package.
“China has to change its policies because low-income countries cannot pay. This is when debt restructuring becomes a top priority,” said Georgieva during ‘The 60 Minutes Interview’ with CNBC that went live on Sunday.
As China over the years has been reluctant to negotiate on their loans, Georgieva stressed that the creditor has to “proactively seek restructuring of these debt obligations”.
As developing countries are struggling to pay off the high level of US dollar-denominated debt, the IMF will bring the creditors with their debtor countries on to a roundtable to push forward the debt restructuring agenda.
Facilitating the first of its kind roundtable is a big win for Georgieva, as taking the seat will be the key creditors, who have a major role to play in charting the way forward for several emerging and developing nations that are in debt.
She shared that work is underway to bring all creditors—the traditional creditors from advanced economies, new creditors such as China, Saudi Arabia and India as well as the private sector and put them around the table with the debtor countries.
Sri Lanka is currently awaiting debt assurances from China to unlock a US $ 2.9 billion bailout package from the IMF. Both India and the Paris Club nations have extended their financing assurances pertaining to Sri Lanka’s debt to them, which the IMF has acknowledged.
In response, China last week extended a two-year debt moratorium to Sri Lanka. While the IMF has not yet provided any guidance on where it stands regarding China’s assurances to Sri Lanka, a top US official visiting Colombo said last week that Beijing has not done enough.
China is Sri Lanka’s largest bilateral lender. Official data from the Finance Ministry shows China accounting for only about 10 percent of the country’s US $ 35.1 billion in external debt at the end of April 2021. However, some observers believe that the figure may cover only government-to-government debt.
One thought on “LNP – China confirms attendance at IMF’s first-ever creditor-debtor roundtable in India”
China will participate. Will we get any relief from China? Very unlikely