Treasury Secretary Janet L. Yellen on Sunday urged international creditors to accelerate their efforts to provide debt relief to developing countries facing default, arguing that bolstering their deteriorating finances would benefit the global economy.
Speaking in Gandhinagar, India, ahead of a meeting of Group of 20 finance ministers, Ms Yellen referred to a recent agreement between international creditors, including China, to help Zambia pay off its debt. She said the deal, which took more than a year to negotiate, should serve as a blueprint to help other countries, such as Ghana and Sri Lanka, speed up debt relief and restore growth.
“We should apply the common principles that we agreed on in the Zambia case to other cases, rather than starting from scratch every time,” Ms Yellen said. “And we have to go faster.”
The finance minister noted that more than half of low-income countries are in or on the verge of a debt crisis – twice the number in 2015. These countries are caught in a vicious circle as high public debt makes it difficult to attract public and private investment to attract.
“If these countries develop and contribute to the world economy, we all benefit,” Ms. Yellen said.
Last month, the Zambian government welcomed an agreement securing a three-year moratorium on $6.3 billion in debt, most of which goes to Chinese lenders. This cleared the way for the IMF to release $188 million in aid as part of a $1.3 billion bailout. The agreement came only after a year and a half of agonizing negotiations that left Zambia’s finances in a precarious state.
Ms Yellen said she would urge her G20 peers to speed up efforts to allow poor countries to restructure their debt and to give borrowers more clarity on how the restructuring should work.
Her trip to India comes less than a week after she returned from Beijing, where she has held meetings with senior Chinese officials on how to stabilize US-China relations.
Beyond the debt crisis, finance ministers are expected to discuss international efforts to modernize the World Bank and other regional development banks.
Finance ministers are expected to continue discussing international support for Ukraine, which has been a contentious issue within the G20. Russia is a member of the group and several countries, including India, have attempted to remain neutral in the conflict.
In her remarks on Sunday, Ms Yellen made it clear that the United States and its Western allies have no intention of reducing support for Ukraine.
“Our coalition’s support for Ukraine is clear,” Ms Yellen said. “The United States will stand by Ukraine for as long as is necessary. And I know the allies and partners in our coalition will do the same.”