The headquarters of the People's Bank of China, in Beijing, on April 4, 2020.CARLOS GARCIA RAWLINS/Reuters
China reiterated it is willing to work with all parties to implement the Common Framework for debt disposal on Friday but stopped short of dropping its demand that multilateral development banks share in debt restructuring losses.
Beijing’s refusal to budge on this issue is a major roadblock to debt relief for cash-strapped countries wanting to use the framework to access further loans from the International Monetary Fund (IMF), as they first must obtain refinancing assurances from China, the world’s largest bilateral creditor.
Standoffs between major Western-backed lenders like the IMF and China, have been blamed for keeping countries such as Zambia mired in default for nearly three years. Authorities in Beijing prefer to roll over debt payments rather than write them off.
People’s Bank of China Governor Yi Gang made the remarks at a meeting of Group of 20 finance ministers and central bank governors during the World Bank and IMF Spring Meetings in Washington D.C., according to a statement by the Chinese central bank.
Beijing extended $138-billion in new loans between 2010 and 2021, according to World Bank data, and some estimates put total lending at almost $850-billion.
Reuters has reported that Beijing was poised to drop its demand that multilateral development banks share in debt restructuring losses, partly in exchange for the IMF and the World Bank providing earlier access to their debt sustainability analyses.
Neither the PBOC nor the Finance Ministry responded to a request for comment on the matter during Chinese business hours on Thursday.
No commitments by China were included in a joint statement issued on Wednesday by the World Bank, the IMF and India, current president of the G20, after the first full-fledged meeting of the new Global Sovereign Debt Roundtable. However, the statement did confirm that they had agreed on ways to streamline debt restructuring efforts, including data sharing and clearer timetables.
When asked whether the PBOC’s statement meant that Beijing was going to drop its demand, Chinese foreign ministry spokesman Wang Wenbin told a news briefing on Friday that Beijing had proposed three solutions to the debt disposal issue at the sovereign debt roundtable meeting, one of which was that the IMF should speed up and improve information sharing on debt sustainability analyses.
World Bank President David Malpass told reporters in Washington on Thursday that participants in the sovereign debt roundtable will have a workshop in May to discuss burden-sharing among creditors.
No specific date has been set for the meeting.