Yellen ‘eager’ to work with China on debt, other global challenges
By David Lawder and Aftab Ahmed
GANDHINAGAR, India (Reuters) – U.S. Treasury Secretary Janet Yellen expressed her enthusiasm to collaborate with China on various areas of mutual interest, including debt restructurings for poorer countries. She emphasized the need for reforms in multilateral development banks before considering capital increases.
During a press conference prior to a meeting of Group of 20 finance ministers and central bankers in India, Yellen stated that her recent visit to Beijing helped establish a more stable foundation for the U.S.-China relationship. She emphasized the obligation of the world’s two largest economies to cooperate on matters of mutual concern.
“While there is still much work to be done, I believe this trip was a significant starting point,” Yellen said. ”I am eager to build upon the progress we made in Beijing and take further action.”
Yellen acknowledged the ongoing concerns regarding China’s unfair trade practices, which led to the imposition of tariffs by the United States. She highlighted the importance of creating an environment in which U.S. corporations can invest and thrive in China.
Regarding Russia, Yellen affirmed that the United States will continue to restrict Russia’s access to military equipment and technologies needed for the invasion of Ukraine. She emphasized the goal of combating Russia’s efforts to evade sanctions.
As the chair of the G20 this year, India has maintained a mostly neutral stance on the war, refraining from directly blaming Russia for the invasion and advocating for a diplomatic solution. Yellen expressed her determination to push for the full and timely participation of all bilateral official creditors in pending debt restructurings at the G20 meeting in Gandhinagar, India.
Yellen discussed Zambia’s debt restructuring with her Chinese counterparts and highlighted the need to apply common principles agreed upon in Zambia’s case to other cases. She expressed hope for the swift finalization of debt treatments for Sri Lanka and Ghana, enabling the International Monetary Fund (IMF) to proceed with initial loan program reviews in the coming months.
Yellen emphasized the necessity of a debt restructuring “user guide” to provide clarity for borrowing countries and other stakeholders. She also stressed the importance of putting the IMF’s Poverty Reduction and Growth trust on a more solid financial footing, with the U.S. Treasury ready to assist in considering options.
‘BETTER BANKS’
Yellen outlined several next steps for the evolution of the World Bank and other multilateral development banks. However, she emphasized that any exploration of capital increases for these institutions should only be considered after implementing reforms aimed at expanding their role beyond poverty reduction to address global challenges like climate change and pandemics.
“Our focus should be on building better banks, not just bigger banks,” Yellen stated.
She reiterated her estimation that multilateral development banks could increase lending by $200 billion over a decade through balance sheet reforms. Yellen also highlighted the potential for further increases by implementing recommendations from the G20 Capital Adequacy Framework report.
Among the reform steps for the World Bank, Yellen advocated for a new set of principles that would allow the targeted use of the bank’s concessional financing for global challenges, including climate change. She expressed interest in exploring options for lending to sub-sovereign and supra-sovereign borrowers, such as the COVAX vaccine initiative.
Yellen affirmed the United States’ commitment to implementing a global corporate minimum tax deal reached in 2021, despite the lack of action by the U.S. Congress. She stated that negotiations on the technical details of the deal’s Pillar 1, which involves the reallocation of taxing rights on large multinationals, were nearing completion.
(Reporting by David Lawder in Washington and Aftab Ahmed in Gandhinagar; Editing by Sudipto Ganguly and William Mallard)
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