"With the absence of MDBs' participation in debt restructuring, bilateral official creditors are effectively asked to restructure part of the debt that is not owed to them," Jin said, adding this had increased the "hesitancy" of Chinese creditors. Jin also said that removing investments in "productive assets" from debt stock calculations in debt restructuring situations "should be encouraged". He acknowledged diverging opinions within China about debt restructuring, which he attributed partly to a lack of experience. "At most 15 years ago, in the multilateral forums China was always on the side of the borrowing countries," Jin said. "This is a big transformational shift, so the mindset and mentality need to be adjusted." (Reporting by Rachel Savage, editing by Karin Strohecker and Alex Richardson)
(Adds quotes, further details and context)
By Rachel Savage
JOHANNESBURG, March 27 (Reuters) - Multilateral
development banks (MDBs) reluctant to offer debt relief need to
shoulder an "equitable burden" in sovereign debt restructurings,
a People's Bank of China official said on Monday.
China has lent hundreds of billions of dollars to developing
countries - mainly for infrastructure projects - over the last
two decades. But with countries such as Zambia, Sri Lanka and
Ghana having defaulted, China has faced criticism for holding up
the debt restructuring processes.
Jin Zhongxia, the director general of the central bank's
international department, said in an online conference that
institutions such as the World Bank and International Monetary
Fund cite their credit ratings as a reason for not restructuring
debt.
However, Chinese lenders such as the Export-Import Bank of
China and China Development Bank - Beijing's two main trade
policy banks - share this concern and argue this should be
"equitable for them", Jin added.
"MDBs have been reluctant to restructure their outstanding
debt and one argument (they make) is we are not yet in a time of
systemic debt distress," Jin said at a Chinese development
finance conference hosted by the Finance for Development Lab
think-tank.
Jin questioned why, if that was the case, "systemic
mechanisms" were needed, including the Debt Service Suspension
Initiative at the start of the COVID-19 pandemic and the G20
Common Framework process, which Zambia, Ghana and Ethiopia are
using.
The World Bank, the United States and other wealthy
countries, and developing countries that lend at concessional
rates, have opposed China's request for MDBs to take haircuts.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.