China’s debt practices have caused ‘suffering’, hurt multilateral restructuring: US Treasury official

Dozens of countries may be burdened with debt-servicing problems, lower growth and underinvestment, top adviser Brent Neiman warns

Notes China’s ‘enormous scale’ as a lender, citing estimates of up to US$1 trillion worth of outstanding official loans

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China is the world’s largest official creditor. Photo: Bloomberg

Published: 10:10pm, 20 Sep 2022Updated: 5:53am, 21 Sep 2022

China’s delays in helping to restructure debt to low- and middle-income countries have inflicted “suffering” and threaten to undermine multilateral efforts to lower these burdens on countries from Sri Lanka to Argentina, a senior US Treasury Department official warned on Tuesday.

“These delays carry suffering and uncertainty, may discourage others from requesting needed treatments, and preclude the best outcomes,” Brent Neiman, counsellor to Treasury Secretary Janet Yellen, said in a broadside against Beijing’s international lending practices.

The delays Neiman referenced included the time it took for Chinese government officials to join a creditor committee that paved the way for a US$1.4 billion bailout by the International Monetary Fund (IMF), which he pegged at half a year.

China’s embassy in Washington did not immediately respond to a request for comment about Neiman’s speech.

The Treasury Department official cited Beijing’s delay in joining a creditor committee for Ethiopia – authorised under a common framework for debt treatments agreed by the Group of 20 major economies in late 2020 – “until it was clear that the IMF programme would expire and discussions on a debt treatment would not take place because of the conflict”.

Implemented to help some 70 countries in danger of default, the framework was agreed upon at the same time by the Paris Club, a group of 22 countries that coordinates on reaching debt-restructuring deals with the nations they lend to so that all creditors are affected equally.

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