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Debt crisis: IMF says China ready for roundtable talks
View(s):Funding agency optimistic after discussions with Chinese authorities
China has agreed to form a global sovereign debt “roundtable” that would include a wide variety of stakeholders and private sector creditors, International Monetary Fund Chief Kristalina Georgieva has been quoted as saying.
Ms. Georgieva told an event hosted by the IMF on December 15 that she was feeling “a bit more optimistic” about the prospects for dealing with major debt issues facing low-and middle-income countries after high-level meetings with Chinese authorities last week, the Reuters news agency reported.
On December 9–after Ms Georgieva attended meetings in the Chinese Province of Anhui–the IMF issued a statement saying she had a “very fruitful exchange” with Chinese authorities on reducing the risk of debt crises.
There have been repeated calls globally for reforms to accelerate debt treatments under the G20 Common Framework and to expand it to include middle-income countries. The Common Framework requires private creditors to participate on comparable terms. A key principle is to incorporate non-Paris Club member lenders, such as mainland China, India, Saudi Arabia, Kuwait, and Turkey, in addition to private creditors, to ensure “fair” burden sharing across all creditors.
“We need to build on the momentum of the agreement on Chad’s debt treatment and accelerate and finalise the debt treatments for Zambia and Sri Lanka, which would allow for disbursements from the IMF and multilateral development banks,” Ms. Georgieva was quoted in the statement as saying.
“We are also seeing new cases that are coming in this time of tightened global financial conditions,” she said. “We talked about how we can prevent individual cases of debt distress from triggering a global debt crisis.” And she saw “space for a platform for more systematic engagement on debt issues, where China can play an active role”.
On Thursday, Ms. Georgieva said the discussions in China had yielded some progress, Reuters reported. “We agreed that we should form a global sovereign debt roundtable at the highest level — the key creditors, some of the borrowers, the private sector–with the World Bank, the IMF and the G20 presidency being the co-conveners.”
“We need that place … We cannot have solutions for systemic risk with the parties to this solution being in different rooms and not talking to each other at the same time. That just cannot happen,” she is quoted as saying, adding that the proposed roundtable offered a structure to help improve the debt treatment process and avoid a systemic debt crisis.
No further details were immediately available about the roundtable and when it could have an initial meeting, Reuters said.
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