China drags its feet as G-20 calls for debt transparency
VIENNA / NEW YORK / TOKYO – Senior economic officials from the Group of 20 major economies on Wednesday discussed debt relief for low-income countries struggling with their immunization campaigns, but advanced countries failed to close the gap with the main Chinese creditor, who has resisted disclosing details of the loans.
The virtual meeting of finance ministers and central bankers discussed ways to provide financial support, covering topics such as the potential extension of a suspension of bilateral debt service payments until the end of 2021. officials had previously agreed in November on a common framework for restructuring and debt cancellation.
But while China has joined the latter program, it has proven to be less cooperative than expected by other G-20 members. Beijing was extremely reluctant disclose the necessary data on its loans to developing countries, claiming, for example, that the 100% state-owned China Development Bank is a “commercial creditor” that cannot be coerced into participating in the program. debt relief.
A slow recovery in emerging countries risks not only slowing the global economy as a whole, but also prolonging the coronavirus pandemic by hampering vaccination efforts.
The International Monetary Fund projects that the overall budget deficits of low-income countries will increase to 4.9% of gross domestic product, compared to 10.4% in advanced countries, suggesting a relative lack of purchasing power for the measures. aimed at stimulating hard-hit economies. The pandemic has created a vicious cycle of falling tax revenues and inadequate economic stimulus in the poorest countries, making external support such as debt relief vital.
This hampers a vaccination campaign already heavily oriented towards rich countries. While the United States and United Kingdom administered around 50 doses of the vaccine per 100 people, developing countries in South America and Asia administered less than 10, according to the statistics site Our World in. Data.
The gap between rich and low-income countries using the UN-backed COVAX facility “is getting more grotesque every day,” World Health Organization Director General Tedros Adhanom Ghebreyesus said at the end of March .
And with much of the raw material and resource supply chain concentrated in these same developing countries, an uninterrupted epidemic could have serious global consequences.
The economic woes of some emerging countries are compounded by capital flight, particularly with interest rates in the United States starting to rise. Weaker currencies also add to the burden of dollar-denominated debt.
The IMF estimates that bringing the pandemic under control quickly could generate $ 1 trillion in additional tax revenue for advanced economies through stronger growth, as well as save trillions of dollars more in budget support.
“Global cooperation must be strengthened to produce and distribute vaccines in all countries at affordable costs,” the organization said.