U.S. doesn’t expect big breakthroughs on debt issues this week – Treasury officials

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WASHINGTON, Oct 11 (Reuters) – U.S. Treasury Secretary Janet Yellen sees debt restructuring as a key priority, but senior Treasury officials have said they do not expect major breakthroughs on debt. debt issues at this week’s meetings of the International Monetary Fund and the World Bank.

IMF Managing Director Kristalina Georgieva said on Monday she hoped Zambia and Chad’s debt restructuring efforts could be completed by the end of the year, which she said would open the way for more countries to ask for help.

The Group of 20 nations launched its Common Framework for Debt Relief at the end of 2020 with the Paris Club to help low-income countries, but it has so far failed to produce a single debt restructuring agreement, even though some 60% of these countries are in or near debt distress.

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Last week, Yellen singled out China, the biggest creditor to many African countries, for dragging its feet, and said it was crucial that all the world’s major bilateral creditors participate meaningfully in recovery efforts. restructuring.

“To date, China has delayed providing debt treatment to borrowers in over-indebtedness or has provided treatment that fails to restore the borrower’s debt sustainability,” she said in a statement. speech at the Center for Global Development.

China last month denied any delays in Zambia’s debt file, saying it had played a “positive role” in its restructuring.

A US Treasury official told reporters there had been gradual progress on the Chad and Zambia cases, but agreements were unlikely to be reached in the coming days.

IMF Chief Economist Pierre-Olivier Gourinchas told reporters that countries should quickly seek help from the global lender and their creditors, and called for faster action to address growing debt problems. faced by a growing number of countries.

“Progress towards orderly debt restructuring through the G20 Common Framework is urgently needed to avert a wave of sovereign debt crises. Time may soon be running out,” he said.

China was also still blocking calls to expand the G20 debt reduction initiative to include middle-income countries, the US Treasury official said, but progress on individual cases was possible.

Helping Sri Lanka, one of the most pressing such cases, would require a process with major creditors outside the G20 framework, the Treasury official said.

Yellen, who warned last week that some countries would need “significant debt relief,” would discuss the issue with his counterparts during the week, a second Treasury official said.

The Zambian government told investors on Friday it hoped to agree debt relief terms with official creditors by the end of the year or early 2023.

Zambia was the first African country to default in the era of COVID-19, as it struggled with debt that reached 133% of GDP by the end of 2021.

Chad’s creditors are also close to reaching a debt relief deal, a French finance ministry source said on Monday.

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Reporting by Andrea Shalal; Editing by Muralikumar Anantharaman and Bernadette Baum

Our standards: The Thomson Reuters Trust Principles.

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