China agrees to formation of global sovereign debt 'roundtable', says IMF chief
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IMF chief Kristalina Georgieva is feeling "more optimistic" about the debt issues facing low- and middle-income countries, after high-level IMF meetings with Chinese officials.
PHOTO: REUTERS
WASHINGTON - Chinese officials have agreed to participate in a global sovereign debt “roundtable” that would include a wide variety of stakeholders, including private sector creditors, International Monetary Fund (IMF) chief Kristalina Georgieva said.
Dr Georgieva told an event hosted by the IMF on Thursday that she was feeling “a bit more optimistic” about the prospects for dealing with major debt issues facing low- and middle-income countries after recent high-level meetings with the Chinese authorities.
The IMF chief had earlier said she had a “fruitful exchange” with her Chinese counterparts on the need to accelerate debt relief for countries like Zambia and Sri Lanka, adding that she saw “space for a platform for more systematic engagement on debt issues, where China can play an active role”.
On Thursday, Dr Georgieva said she had a “very constructive engagement” with Chinese leaders on the debt issue during her meetings after repeated calls for reforms to accelerate debt treatments under the Group of 20 (G-20) common framework and expand it to include middle-income countries.
US Treasury Secretary Janet Yellen and other Western officials have expressed mounting frustration about what they see as foot-dragging by China, now the world’s largest sovereign creditor, in providing relief under the G-20 framework.
China has argued that private creditors and multilateral development banks should be required to accept debt “haircuts” to make the process fair.
Dr Kevin Gallagher, director of the Global Development Policy Centre at Boston University, said a broader, more systemic solution was clearly needed.
“Systemic could be music to all of our ears, if it means really bringing together all the different creditor classes, including the multilateral development banks, but especially the private bondholders and the Chinese,” he said.
He said it was also essential to move away from the case-by-case approach of the G-20 framework towards the more systemic approach of earlier debt restructurings.
Dr Georgieva said the discussions in China yielded some progress.
“We agreed that we should form a global sovereign debt roundtable at the highest level – the key creditors, some of the borrowers, the private sector – with the World Bank, the IMF and the G-20 presidency being the co-conveners,” she said.
“We need that place... We cannot have solutions for systemic risk with the parties to this solution being in different rooms and not talking to each other at the same time. That just cannot happen.”
The proposed roundtable offered a structure to help improve the debt treatment process and avoid a systemic debt crisis, she said.
No further details were available about the roundtable and when it could have an initial meeting.
Dr Georgieva, World Bank president David Malpass and other financial leaders met in China’s Anhui province earlier in December with officials from the People’s Bank of China, China’s Finance Ministry and its Exim Bank and the China Development Bank. REUTERS
