Jakarta, CNBC Indonesia – India brings good news for countries trapped in debt, including loans to China. The host of the G20 2023 is currently working on a proposal so that the group’s countries can get debt relief.
Two Indian government sources said the idea came as finance ministers and the heads of central banks from the G20 prepare to meet in Bengaluru next week. The meeting will be the first major event of India’s one-year presidency at the G20.
“India is drafting a proposal to try to persuade countries like China to make big cuts in lending to struggling countries,” said one of the Indian officials, both of whom declined to be identified, citing ReutersWednesday (15/2/2023).
“China and other G20 countries are aware that India is working on a proposal”, the officials added.
However, China, for example, is still silent about this. China’s Foreign Ministry said there was nothing to share about that.
“China takes developing country debt problems seriously and supports relevant financial institutions to propose solutions,” the ministry said.
“It is our consistent stance that multilateral financial institutions and commercial creditors, which hold the majority of developing country debt, should participate in debt relief efforts,” he added.
On the other hand, the People’s Bank of China and China’s Ministry of Finance also declined to comment. India’s Ministry of Finance and India’s foreign ministry also did not immediately respond.
Meanwhile, the International Monetary Fund (IMF) previously said it would hold virtual meetings with the World Bank, India, China, Saudi Arabia, the United States (US) and other G7 member countries on Friday. The meeting was held to reach an understanding of common standards, principles and definitions for restructuring distressed national debt.
Currently two of India’s neighbors, Pakistan and Sri Lanka, are in an economic crisis. Both are in dire need of international assistance before they run out of foreign currency to pay for essential imports.
India and the Paris Creditors’ Club also recently told the IMF that they support Sri Lanka’s debt restructuring plans as the bankrupt country seeks a US$2.9 billion loan. The US also said it was willing to do its part.
It is understood the Export-Import Bank of China has offered Sri Lanka a two-year moratorium on its debt and has said it will support the country’s efforts to secure an IMF program. However, according to a Sri Lankan government source this is not enough.
The IMF, World Bank and the US have been pushing for the “G20 Joint Initiative Framework” launched in 2020 to help poor countries defer debt payments, which was expanded to include middle-income countries. But this was rejected by China.
(sef/sef)
