(Washington) US Treasury Secretary Janet Yellen expressed concern Thursday that Chinese creditors may benefit from international financial assistance to poor countries.
“We would be very concerned to see the resources provided to these countries being used to repay debts to China, which is inconsistent with the intent of the programs,” she said during a hearing before a House committee.
China in particular is the first creditor of African countries, whose debts have exploded since the pandemic. The moratorium has given some air to the more indebted countries, and the next step will be to write off some of the debt.
The G-20 succeeded in persuading China and private creditors to participate in future debt renegotiations.
“We spoke with China about their participation, and they promised to participate as equal partners in” these debt discussions, Treasury Secretary Joe Biden noted.
However, she lamented, “there are gag entities in China that lend and have not fully participated in these efforts.”
“This concerns us and we have talked with the Chinese about it,” she added, noting the need for transparency, which is “an important way to ensure that funds are not misappropriated.”
China launched the “New Silk Roads” in 2013, which aims to build infrastructure abroad and increase its influence there.
Janet Yellen appealed to the US Congress to release funds to help poor countries in this debt.
The international financial institutions “need additional support, especially since the United States has not always contributed to the peak of promises.”
We have over $2.7 billion in committed commitments […]And that will only increase unless Congress appropriates funds to meet our commitments, she said.
“The pandemic has wreaked havoc on the finances of these countries, and if they want to rebuild themselves, many of them will have to improve their situation in the face of their debts. She pleaded that the United States was the first to create these ‘programs’, but now we have to fund them.”
Through the G20, the World Bank and the International Monetary Fund (IMF) launched in the spring of 2020 the Debt Service Suspension Initiative (DSSI) for dozens of low-income countries, which expires at the end of the year.