Specific, credible financing assurances for Sri Lanka “most urgent” – U.S. Treasury Secretary

Janet Yellen

(Photographer: Al Drago / Bloomberg via Getty Images)

U.S. Treasury Secretary Janet Yellen stresses that committing to specific and credible financing assurances for Sri Lanka is “most urgent”.

The United States will continue to push for all bilateral official creditors including China to participate in what she called “meaningful” debt treatment for developing countries and emerging markets in distress, Yellen said, joining a press conference at the G20 meeting in Bengaluru.

Speaking on tackling building a stronger and more resilient global economy, Yellen noted that it is imperative to work together to ease the debt overhang that is holding back too many countries.

“The IMF estimates that around 55 percent of low-income countries are close to or in debt distress.”

Yellen said she looks forward to robust talks later this week about the Common Framework process to help countries like Ghana.

The US Treasury Secretary will also be engaging in discussions pertaining to international coordination on debt restructuring for middle-income countries.

Yellen was speaking to reporters in the southern Indian city before a two-day G-20 meeting of finance ministers and central bank governors kicks off on Friday.

“We need to work together to ease the debt overhang that is holding back too many countries,” she said. Debt distress is expected to be a hot topic at the meeting, after a year that saw three South Asian countries – Sri Lanka, Pakistan and Bangladesh – turn to the International Monetary Fund for help.

Yellen noted that the IMF said about 55% of low-income countries are close to or in debt distress. “I will continue to push for all bilateral official creditors, including China, to participate in meaningful debt treatments for developing countries and emerging markets in distress,” she said.

Most urgent, Yellen said, “is the need to provide debt treatment to Zambia and to commit to specific and credible financing assurances for Sri Lanka.”

China last month offered Sri Lanka a moratorium, but its reluctance to provide more significant assurances is seen as a key obstacle hindering Colombo’s efforts to unlock a $2.9 billion IMF bailout.

“I will also be discussing international coordination on debt restructuring for middle-income countries,” she said, while listing other topics she intends to bring up, including climate change and the evolution of the multilateral development banks.

With respect to debt, she was optimistic that China would be constructive and understand the needs of distressed countries. “It’s important for China to cooperate” and “come to the table” for nations like Sri Lanka and Zambia, she said.

“The conversations that I have had with my Chinese counterparts have been constructive,” she said, “and I’m hopeful that we’ll see progress in the coming months.”