Yellen worries that aid to poorer countries could benefit Chinese lenders

U.S. Treasury Secretary Janet Yellen on Thursday expressed concern that Chinese lenders could use international financial aid to help poorer countries.

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“We are very concerned to see the resources provided to these countries being used to repay the debt to China, which is against the purpose of the plans,” he said during a hearing before the House of Representatives committee.

First lender of African countries

China was the first lender of African countries, especially after the outbreak of debt. A moratorium has given some air to the most indebted countries, with the next step being to write off some debt.

The G20 has been successful in convincing Chinese and private lenders to participate in future debt restructuring.

“We talked to China about their participation and promised that they would participate as equal partners in the structure of these discussions on debt,” again Finance Minister Joe Biden pointed out.

However, he lamented that “there are lending institutions in China that do not fully participate in these efforts.”

“It worries us, we’ve talked to the Chinese about it,” he said, referring to the need for transparency, which is “an important way to ensure that financial fraud is not committed”.

“New Silk Roads”

China introduced “new Silk Roads” in 2013, aimed at building infrastructure abroad and increasing its influence.

Janet Yellen pleaded with the US Congress to release funds to help poor countries with this debt.

International financial institutions “need extra support, especially since the United States has not always contributed to the height of promises.”

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“We have $ 2.7 billion in unfulfilled obligations (…), which will increase if Congress does not allocate funds to fulfill our obligations,” he said.

“The plague has wreaked havoc on the finances of these countries, and if they are to rebuild themselves, many will have to face their debt and improve their situation.”

With the G20, the World Bank and the International Monetary Fund (IMF) launched in the spring of 2020 an attempt to suspend credit service to dozens of low-income countries (DSSI), which expires at the end of the year.

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