Artwork: Tang Tengfei/GT
As developing countries lag behind developed countries in economic recovery due to, among other things, unequal access to vaccines, the G20 debt relief plan for struggling countries makes the subject of a heated debate, in which American officials and experts have chosen to slander China, once again.
The executive director of the American non-profit organization Jubilee USA, Eric LeCompte, recently said that China was slowing down the process, the South China Morning Post reported. It appears that China wants to end its own debt agreements before the G20 Common Framework process for debt treatment is more fully implemented, LeCompte said.
Ahead of the meeting of G20 finance ministers and central bankers in Jakarta on Feb. 17, US Treasury Secretary Janet Yellen reportedly blamed China on the issue. She said the G20’s Debt Service Suspension Initiative (DSSI) was “not going very fast” and called on China to be “more active” in G20 debt relief efforts.
Since the pandemic, to deal with the excessive debt burden, the G20 produced the DSSI – a program for deferring public debt service owed by most low-income countries (LICs) in 2020, which was then extended until the end of 2021. In November 2020, the G20 reached agreement on a common framework for debt treatment to help 70 countries at risk of default.
However, more than a year has passed and only three countries – Chad, Zambia and Ethiopia – have requested assistance and none of them have received debt relief, according to a report by the Center for Global Development based in Washington and London. And the meeting of G20 finance ministers and central bankers in February also ended without a solution to the debt crisis. Since then, the United States and some multilateral groups have again blamed China.
It has been proven that such ill-intentioned accusations are pure nonsense. In fact, China has fully implemented the G20 DSSI. The total debt service payments suspended by China is the largest among G20 members, according to the Chinese Foreign Ministry.
In addition, China’s unofficial financial institutions have also taken debt service suspension measures in a comparable manner with reference to the provisions of the DSSI. China has also treated certain countries’ debt on a case-by-case basis under the Common Framework for Debt Treatment. These measures all play a positive role in alleviating the debt burden of the countries concerned.
According to authoritative international agencies, multilateral development banks and private creditors, mainly commercial institutions from developed countries, account for a large part of the debt structure of these heavily indebted poor countries. For example, multilateral financial institutions and commercial creditors account for more than three quarters of the total external debt owed by African countries. They apparently bear a greater responsibility for helping developing countries reduce their debt burden.
Notably, the debt problems of developing countries continue to worsen with the continued impact of the pandemic, and they also face a greater inequality problem to revive an economic recovery. Citing World Bank calculations, Reuters reported that 74 low-income countries must repay $35 billion to bilateral and private lenders this year, nearly double from 2020. With the U.S. Federal Reserve set to repay raise interest rates, borrowing costs should rise for riskier emerging markets.
To properly resolve the current difficult debt situation of developing countries and help their economies weather the impacts of COVID-19, the G20, the most active communication and coordination mechanism of current global economic governance, should continue to coordinate the efforts of all parties to advance existing debt relief. program.
It is obvious that developed countries like the United States should take greater responsibility and make more efforts. Since the pandemic, the US quantitative easing policy has created significant ripple effects on the global economy. When the United States and European countries tighten monetary policy, they must fully consider the potential impacts on developing countries and adopt more responsible approaches.
The author is a journalist at the Global Times. email@example.com