(LANKAPUVATH | COLOMBO) –Officials from China, India, Saudi Arabia and Group of Seven nations will participate in a first virtual meeting of a new sovereign debt roundtable on Friday, the International Monetary Fund said on Monday, confirming an earlier Reuters report.
The roundtable will also include officials from countries that have requested debt treatments under the Group of 20 common framework – Ethiopia, Zambia and Ghana – as well as middle-income countries such as Sri Lanka, Suriname and Ecuador, which have faced their own debt crises, three sources had earlier said.
The meeting will be co-chaired by the IMF, the World Bank and India, the current leader of the Group of 20, and comes a week before G20 finance officials are due to gather in Bengaluru, India, from Feb. 23-25. An in-person meeting of the roundtable expected on Feb. 25 and a formal launch is planned at the IMF-World Bank spring meetings in April.
Brazil, which will lead the G20 next year, is also taking part, one of the sources said.
An IMF spokesperson confirmed the first roundtable meeting would take place on Friday, and said more details would be released in the near future.
“The objective is to bring together key stakeholders involved in sovereign debt restructuring, from traditional creditors from advanced economies, to new creditors like China, Saudi Arabia, India, as well as the private sector and debt countries to address the current shortcomings,” they said.
The roundtable will include the Paris Club of official creditors and private sector participants – the Institute of International Finance (IIF), the International Capital Markets Association and two private-sector financial institutions that have asked not to be identified, one of the sources said.
Creation of the body comes amid growing frustration about the slow pace of discussions on debt relief for Zambia, which first requested help two years ago. Organizers say the roundtable could help resolve issues in principle and will not focus on Zambia or other individual cases.
Officials hope to resolve China’s concerns about cutoff dates to protect new financing from debt restructuring by the end of the year, one of the sources said.
G7, International Monetary Fund and World Bank officials have long pushed for faster and broader efforts to deliver debt relief to heavily indebted nations to avoid cuts in social services that they fear could tip off social unrest.
U.S. Treasury Secretary Janet Yellen and other G7 officials see China, now the world’s largest sovereign creditor, as the main stumbling block for quicker work on debt treatments. They are also pushing for agreement by G20 members on expanding the common framework to include middle-income countries.
Eric LeCompte, executive director of the Jubilee USA Network, a coalition of religious, development and advocacy groups, said support for the matter was growing among other countries. But China’s opposition – and that of Russia – remained significant a “stumbling block,” he said.
“The majority of countries support expanding these policies to middle-income countries, but China is the biggest challenge,” LeCompte said, adding that Europe had gone through a similar period of reluctance on debt relief in the 1990s, but eventually came around.
Also on the agenda will be China’s repeated calls for World Bank and other multilateral development banks to participate in debt reductions – a proposal firmly rejected by U.S. officials, who argue that those lenders already offer highly concessional loans and grants to countries in crisis.