China must take a haircut on its loans to poor countries, says India’s G20 Sherpa

China must agree to take a haircut on its loans to poor countries and assist their economic recovery, India’s G20 Sherpa Amitabh Kant has said, in a rare, direct reference to Chinese debt of developing nations. “China needs to come out openly and say what their debt is and how to settle it,” said Amitabh Kant, according to a Bloomberg news report. “It can’t be that the International Monetary Fund [IMF] takes a haircut and goes to settle Chinese debt. How is that possible? Everybody has to take a haircut,” the Sherpa was quoted as saying.

While the United States has been a vocal critic of Chinese debt in developing nations, with its top officials frequently commenting on the top Asian lender’s role in the restructure process, India has seldom made mention of China while commenting on sovereign debt of countries. Kant’s remarks assume significance ahead of a scheduled virtual meeting of the Global Sovereign Debt Roundtable, organised by the IMF, the World Bank and India, which is leading the Group of 20 major economies this year. The meeting will not feature a “country-specific” discussion but will focus on broader issues “impeding reaching a timely debt restructuring process”, and lessons from recent cases and possible technical solutions to address shortcomings, Director of the IMF’s Strategy and Policy Review Department Ceyla Pazarbasioglu told reporters. Officials from creditor countries including China, India, Saudi Arabia, the United States and Group of Seven (G7) members are expected to participate. However, it remains to be seen if China will come on board by sending written financing assurances to the IMF, especially since Beijing has indicated that Sri Lanka’s multilateral loans must also be subject to a haircut. Reiterating the position, Mr. Wang told the media that the Export-Import Bank of China will “continuously call on commercial creditors to provide debt treatment in an equally comparable manner and encourage multilateral creditors to do their utmost to make corresponding contributions.”

Source : The Hindu

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