Western countries this week increased their criticism of China, the world's largest bilateral creditor, as the main obstacle to debt restructuring for the growing number of countries that cannot service their debts.
US Treasury Secretary Janet Yellen said on Friday that high inflation, tightening monetary policies, currency pressures and capital outflows were increasing debt burdens in many developing countries, and progress was urgently needed.
She said she discussed those issues during a dinner with African finance ministers and in many other sessions.
The Group of Seven rich nations also met African finance ministers, who worry that the focus on the conflict in Ukraine is draining resources and attention from their pressing concerns.
“Everyone agrees Russia should stop its war on Ukraine, and that would address the most significant problems that Africa faces,” Ms Yellen told reporters at the International Monetary Fund and World Bank annual meetings in Washington.
But she said a more effective debt restructuring process was also needed, and China had a big role to play.
“Really, the barrier to making greater progress is one important creditor country, namely China,” she said. “So there has been much discussion of what we can do to bring China to the table and to foster a more effective solution.”
As China is the missing piece in the puzzle of a number of debt talks under way in developing markets, the Group of 20 launched in 2020 a Common Framework to bring creditors such as China and India to the negotiating table along with the IMF, Paris Club and private creditors.
Zambia, Chad and Ethiopia have applied to restructure under this new, yet-to-be tested mechanism. Sri Lanka is set to start talks with bilateral creditors, including China, after a $2.9 billion staff level agreement with the IMF under a similar platform.
The Paris Club creditor nations last month reached out to China and India seeking to co-ordinate on Sri Lanka's debt talks, but are still awaiting a reply.
The world's poorest countries face $35bn in debt-service payments to official and private-sector creditors in 2022, with more than 40 per cent of the total due to China, according to the World Bank.
Spanish Finance Minister Nadia Calvino, who chairs the IMF's steering committee, told Reuters on Thursday that there was increasing concern about China not participating fully in debt relief efforts, and that China had not sent officials to participate in person at this week's IMF and World Bank meetings.
“China is a necessary partner. It's indispensable that we have them in the room and in the discussions when it comes to debt relief,” Ms Calvino said, adding that many heavily indebted countries were also being hit hard by inflation and climate shocks.
German Finance Minister Christian Lindner also joined the growing criticism. China has said it would not take part in some cases unless the IMF and World Bank also took a cut.
