China proposes three-point plan to relieve indebted countries
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China demands lenders take necessary steps to relieve countries that have defaulted on their loans during a meeting with multilateral lenders in Washington on Wednesday.
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The Headquarters of the People's Bank of China in Beijing, China, 28 September 2018. (Reuters)
China has laid out a three-point plan for multilateral investors to restructure debt for countries around the world at global debt relief talks.
The negotiations included the People’s Bank of China Governor Yi Gang, World Bank President David Malpass, IMF Managing Director Kristalina Georgieva, US Treasury Secretary Janet Yellen, and officials from G-20 host India and Zambia who are seeking debt relief.
During the talks in Washington, China demanded three contingencies from investors at the Global Sovereign Debt Roundtable.
Wang Wenbin, the Chinese Foreign Ministry's spokesperson, outlined the Chinese demands made at the meeting, “First, multilateral creditors need to come up with solutions on their participation in debt treatment as soon as possible.”
China has previously demanded that lenders take losses in the debt restructuring process. The new process laid out by China would see them drop their original demand, which was seen as a key obstacle for negotiations to progress.
“Second, the International Monetary Fund needs to take action in information sharing on debt sustainability assessments as soon as possible. Third, parties concerned need to agree on the specific way for creditors to participate on comparable terms as soon as possible.”
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According to reports, in exchange for Chinese leniency on lenders taking losses in the process, a proposal under discussion would see the World Bank provide billions of dollars in fresh low-interest concessional loans and grants to countries that have defaulted.
The global giant also happens to be the biggest bilateral creditor to the global south.
China is pushing all parties to take “credible steps” to implement the Common Framework on debt relief, according to the spokesperson.
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