US Treasury Secretary Yellen Hopes China May Enter Zambia's Debt Relief Deal
© AP Photo / Stefan KleinowitzUS Treasury Secretary Janet Yellen delivers a speech to the General Delegation for Rapid Entrepreneurship of Women and Youth in Dakar, Senegal, Friday Jan. 20, 2023.
© AP Photo / Stefan Kleinowitz
In November 2020, the G20 launched the Common Framework for Debt Treatments, an initiative aimed at coordinating debt restructuring undertaken by official and private creditors, including non-Paris Club member lenders, such as China. To date, only Chad, Ethiopia, and Zambia have made requests for debt relief under the program.
Speaking to journalists in Dakar, Senegal, on Saturday, US Treasury Secretary Janet Yellen expressed hope that China may join a multilateral debt restructuring deal with Zambia under the G20 Common Framework to ease the Southern African country's onerous debt burden.
“Our counterparts are sophisticated economics officials who can listen to a reasoned argument and understand it [...]. I definitely think they get what the problem is, and that there needs to be a solution,” she is quoted as saying.
The agreement is expected to become a crucial test case for efforts of the international community to help developing countries facing increasing debt vulnerabilities to find relief from crushing debt burdens.
Yellen met with Chinese Vice Premier Liu He in Zurich, Switzerland, ahead of her 11-day trip to Africa, which includes three countries - Senegal, Zambia, and South Africa. During the meeting, she raised the case of Zambia. According to her, China’s response was “constructive.” She gave no more details on the issue, saying that she can't predict what will happen next in the talks, or when.
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Yellen also explained why China has for months been delaying, along with other lenders, a restructuring deal with Zambia, noting that there were some issues with multilateral development banks being reluctant to take a writedown or "haircut," and "that needs to be worked through.”
“But we have counterparts who we are able to talk to in a reasonable way, and work through our differences, and I hope out of that process that some progress will come,” she underlined.
Zambia is a key test case for the program. China, one of the biggest lenders to the developing world, has been criticized by US officials for holding it up in Zambia and other states. Yellen urged China and other creditors to provide "timely, comprehensive and meaningful debt relief" to help countries with unsustainable debt burdens.
"It's important for the entire world that we not allow low-income countries to slide into economic disorder," Yellen highlighted.
She stated that the US has specific concern about Zambia, whose debt restructuring under the G20 Common Framework has taken much longer to carry out than anticipated. The US Treasury secretary is expected to visit Zambia next week as part of her trip to Africa, aimed at promoting economic possibilities between the continent and the US, deepening their ties.