China must take a haircut on its loans to poor countries, says India’s G20 Sherpa

Beijing needs to come out openly and say what their debt is and how to settle it, says Amitabh Kant

China must agree to take a haircut on its loans to poor countries and assist in their economic recovery, India’s G20 Sherpa has said, in a rare, direct reference to Chinese debt of developing nations.

“China needs to come out openly and say what their debt is and how to settle it,” said Amitabh Kant, according to a Bloomberg news report. “It can’t be that the International Monetary Fund takes a haircut and it goes to settle Chinese debt. How is that possible? Everybody has to take a haircut,” the Sherpa was quoted as saying.

Also read: Cancel Sri Lanka’s debt, global scholars tell creditors

While the United States has been a vocal critic of Chinese debt in developing nations, with its top officials frequently commenting on the top Asian lender’s role in the restructure process, India has seldom made mention of China while commenting on sovereign debt of countries.

Mr. Kant’s remarks assume significance ahead of a scheduled virtual meeting of the Global Sovereign Debt Roundtable, organised by the International Monetary Fund (IMF), the World Bank and India, which is leading the Group of 20 major economies this year. The virtual roundtable on February 17 will be followed by an in-person meeting in Bengaluru on February 25, PTI news agency reported from Washington DC.

The meeting will not feature a “country-specific” discussion but will focus on broader issues “impeding reaching a timely debt restructuring process”, and lessons from recent cases and possible technical solutions to address shortcomings, Director of the IMF’s Strategy and Policy Review Department Ceyla Pazarbasioglu told reporters. Officials from creditor countries including China, India, Saudi Arabia, the United States and Group of Seven (G7) members are expected to participate.

Meanwhile, Sri Lankan President Ranil Wickremesinghe on Wednesday said the debt-ridden island nation hoped to receive the IMF’s $2.9 billion package by March to set the country’s economy on a path of recovery after last year’s painful financial crash.