US Treasury Secretary Janet Yellen has called for quick solution to Ghana and Zambia debt problems and pushing for concrete steps to speed up debt relief process for both countries.
According to the Treasury Secretary, she will press for a speedy resolution of Ghana and Zambia’s request for sovereign debt restructuring this week.
Yellen, who is scheduled to meet with counterparts from around the world at this week’s World Bank and International Monetary Fund (IMF) meetings, is also pushing for concrete steps to speed up and make the overall debt relief process more predictable, according to Treasury Undersecretary Jay Shambaugh.
“During the week, Secretary Yellen will maintain urgency for the speedy resolution of Common Framework cases like Zambia and Ghana to remove debt overhangs and foster growth in developing countries,” Treasury said in a statement.
Zambia and Ghana have already defaulted on their foreign debt and are negotiating debt restructuring with creditors. Although 60% of low-income nations are in or near economic crisis, the Group of 20 (G20) common framework established to assist low-income countries has failed to provide immediate debt relief.
Shambaugh noted that at a broad level, they are really just pushing to improve the speed and predictability of the framework. He added that this will require constructive and timely participation of all creditors in international debt restructuring discussions.
The Treasury’s Immediate Priority
According to Shambaugh, Treasury’s immediate priority is to resolve pending requests from Zambia, Ghana, and Ethiopia under the G20 framework, as well as from Sri Lanka, which is working on a separate debt plan due to its middle-income status.
Shambaugh noted that Washington is pushing for consolidated action on Zambia’s debt treatment and creating a creditor committee for Ghana within the next month, and that the world’s two greatest economies, the United States and China, needed to work together on these issues.
Yellen will meet with officials from the G20 and the Global Sovereign Debt Roundtable, which comprises debtor nations, separately on Wednesday to discuss the debt issue, according to the Treasury.
The US official expressed hope that the debt roundtable discussion would result in actual accomplishments. What we’re looking for are concrete steps that will make the process operate faster and in a more transparent way.
Meanwhile, according to sources, the co-chairs of the roundtable – the IMF, the World Bank, and India as the current G20 President, planned to publish a statement following Wednesday’s meeting.
Yellen has no formal meetings scheduled with Chinese colleagues, but a US source said officials from the Biden administration and China will continue to communicate when they are able to.
Meanwhile, Ken Ofori-Atta, the Finance Minister of Ghana indicated that Ghana is poised to secure approval from the International Monetary Fund’s board as she takes a big step towards restructuring its $58 billion-worth of debt this week with its bilateral creditors meeting to discuss whether to provide enough relief to unlock the $3 billion IMF bailout.
Just last week, the International Monetary Fund (IMF) expressed worry and raised concerns about a potential wave of debt restructuring requests and the challenges of handling them, as current restructuring cases face costly delays.
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