Treasury Secretary Janet L. Yellen on Sunday called on international creditors to accelerate their efforts to provide debt relief to developing countries facing defaults, arguing that shoring up their deteriorating finances would benefit the global economy.
Speaking in Gandhinagar, India, ahead of a meeting of finance ministers from the Group of 20 countries, Ms. Yellen cited a recent agreement among international creditors, including China, to help Zambia repay its debts. He said the agreement, which took more than a year to negotiate, should become a blueprint to use in helping other countries, such as Ghana and Sri Lanka, to accelerate debt relief and restore growth.
“We have to apply the general principles that we agreed on in the case of Zambia in other cases rather than starting from scratch every time,” said Ms. Yellen. “And we have to go faster.”
The Minister of Finance noted that more than half of low-income countries are in or close to experiencing debt difficulties – double the total from 2015. These countries face a vicious cycle, as high levels of public debt make it difficult to attract public and private investment.
“When these countries develop and contribute to the global economy, we all benefit,” said Ms. Yellen.
Last month, the government Zambia applauded the deal that guaranteed a three-year reprieve for repaying $6.3 billion in debt, mostly to Chinese lenders. It paved the way for IMF to release $188 million in aid under the $1.3 billion rescue package. The arrangement comes only after a year and a half of torturous negotiations that left Zambia's finances in a precarious state.
Ms. Yellen said she would urge her G20 counterparts to speed up efforts to allow poorer countries to restructure their debt and to provide more clarity for borrowers about how restructuring should work.
His trip to India comes less than a week after he returned from Beijing, where he held meetings with senior Chinese officials about how to stabilize relations between the United States and China.
Beyond debt difficulties, 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 tried 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 support for Ukraine is unequivocal,” said Ms. Yellen. “The United States will support Ukraine for as long as necessary. And I know our allies and partners in our coalition will too.”