Yellen to push for ‘speedy’ action on debt relief for Zambia, Ghana

WASHINGTON – U.S. Treasury Secretary Janet Yellen will push this week for urgent resolution of requests by Zambia and Ghana for restructuring of their sovereign debts, and moves to conclude a debt treatment for Sri Lanka, Treasury said on Monday.

Yellen, who is slated to meet counterparts from around the world during this week’s meetings of the World Bank and International Monetary Fund (IMF), is also pushing for concrete steps to speed up the overall debt relief process and make it more predictable, Treasury Undersecretary Jay Shambaugh said.

“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.

Sri Lanka, Zambia and Ghana have already defaulted on their overseas debt and are working towards debt reworks with creditors. Some 60 percent of low-income countries are in or near debt distress, but the Group of 20 (G20) common framework set up to help low income countries has failed to deliver quick debt relief.

“At a broad level, we’re really just pushing to improve the speed and predictability of this framework,” Shambaugh said at an event hosted by the Brookings Institution think tank. “This is going to require constructive and timely participation of all creditors in international debt restructuring discussions.”

Shambaugh said Treasury’s immediate priority was resolving outstanding requests from Zambia, Ghana and Ethiopia under the G20 framework, and from Sri Lanka, which is working on a separate debt plan since it is a middle-income country.

He said Washington was pressing for “concerted action” on Zambia’s debt treatment and the formation of a creditor committee for Ghana in the next month, adding that the two largest economies in the world – the United States and China – needed to collaborate on these challenges.

“At these meetings, we’re going to be working very hard to speed up this process, make it more transparent and make it function better,” he said, adding that progress had been “slower than we would like.”

A senior Treasury official said it was up to China whether Zambia’s case could be resolved this week.

Yellen and other G7 officials have long criticised China’s slow movement on specific debt treatment cases under the G20 framework, although they have welcomed China’s agreement to provide financing assurances for Sri Lanka, which paved the way for an IMF lending package. – REUTERS.