U.S. pushing to speed up G20 common debt restructuring process

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FILE PHOTO: Four thousand U.S. dollars are counted out by a banker at a bank in Westminster

WASHINGTON – The United States is calling for quicker progress on restructuring the debts of highly indebted countries under the Common Framework agreed last year by the Group of 20 economies and the Paris Club, a senior Treasury official said Wednesday.

G20 member China, in particular, had dragged its heels in some cases, the official told reporters ahead of G20 health and finance ministers in Rome on Friday.

“The Common Framework process is going slowly, in part because of China’s inability to make some decisions on common framework countries,” the official said. “So we’re urging the processes to be speeded up.”

The official said G20 members understood some countries would need additional aid after a temporary pause in debt payments expires at the end of this year, but were not expected to back a debt freeze under the Common Framework, as proposed by World Bank President David Malpass.

Once the debt freeze ends, countries’ debt service payments will be rescheduled into the future, rather than coming due all at once, the official said.

The World Bank this month warned that the debt burden https://www.reuters.com/business/poor-countries-debt-rose-12-record-860-bln-2020-world-bank-2021-10-11 of the world’s low-income countries rose 12% to a record $860 billion in 2020 as a result of the COVID-19 pandemic, and called for urgent efforts to reduce debt levels.

The U.S. official said Washington backed expanding the Common Framework – which currently includes only Chad, Zambia and Ethiopia – to beyond just the poorest countries, and urged steps to accelerate the pace of negotiations.

“The focus in the G20 has been on the Common Framework and trying to make that operational and make it more efficient,” the official said.

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(Reporting by Andrea Shalal and David Lawder; Editing by David Gregorio)