IMF’s Georgieva to press for quicker action on debt relief with China

7:30 pm Thursday, December 01st, 2022

By Andrea Shalal

NEW YORK (Reuters) -International Monetary Fund Managing Director Kristalina Georgieva said on Thursday that she will travel to Beijing next week with heads of other international institutions to press for quicker action on debt relief for poor and developing countries.

The meetings with the country’s leadership will focus on China’s economic, COVID-19 and debt relief policies and will include officials from China Development Bank and the Export-Import Bank of China, the IMF said.

“This is the first time, hopefully, we will be able to sit together and discuss the very pressing issues that China, and the world are faced with,” Georgieva told the Reuters NEXT conference.

Georgieva said that during the Beijing meetings she intends to discuss ways to accelerate China’s participation in debt relief for poor and developing countries as the world’s largest official bilateral creditor.

“I am very hopeful that when we have a chance next week to discuss these issues, we will continue on a path of finding better solutions and strengthening the capacity of the common framework to deliver,” she said, referring to G20 countries’ slow-to-launch common debt restructuring framework.

World Bank President David Malpass told the conference that he would join the discussions in Beijing, along with officials from the World Trade Organization, Organization for Economic Cooperation and Development and others.

Georgieva and Malpass have both called for reforms of the common framework to offer heavily indebted countries a freeze in debt service payments when they apply for debt relief and clearer timelines for reaching agreement on debt treatments.

Asked if China’s slowing growth would limit its appetite for agreeing to debt reductions, Georgieva said she hoped that China would act out of “enlightened self-interest” and strive to prevent debt issues in developing countries from deepening and spilling over to a global debt crisis. Such a crisis would inflict pain on borrowing countries, but would also negatively affect creditor countries, especially China, she said.

China’s COVID-19 restrictions and turmoil in its vast property sector have brought China’s projected growth rate back to 3.2% for next year — barely above global averages and a phenomenon not seen during the past 40 years, she said.

“We have relied on China for a significant increase in global growth,” Georgieva said. “Some 35% to 40% of global growth used to come from China’s growth and this is not the case now, and it’s not going to be the case next year.”

(Reporting by Andrea Shalal; Additional reporting and writing by David Lawder; Editing by Andrea Ricci and Lisa Shumaker)