China calls on Western lenders to ease debt pressure on developing countries

March 24 (Global Times) – China’s Foreign Ministry on Wednesday called on all related parties, in particular Western commercial creditors and multilateral financial institutions, to make contributions to alleviating the debt pressure of developing countries amid the tightening international financial environment.

The remarks were made by Foreign Ministry spokesperson Wang Wenbin, after outgoing World Bank chief David Malpass reportedly called on China “to be more active” in restructuring discussions for developing countries in debt crises.

The US has raised interest rates at an unprecedented pace since last year, leading to a tightening international financial environment, and has made the debt problem of some countries even worse, Wang said at a press conference, when asked about the World Bank chief’s remarks.

The truth is China has been attaching great importance to the debt issue of certain developing countries and has made contributions to easing their burdens and promoting sustainable development, Wang said, noting that China was the largest contributor to the implementation of the G20’s Debt Service Suspension Initiative, Wang noted.

The Export-Import Bank of China has provided financing support documents to Sri Lanka to help it address debt issues swiftly and effectively, which fully speaks to China’s sincerity and effort to support Sri Lanka in achieving debt sustainability, Wang said.

The spokesperson called on commercial and multilateral creditors to take part in Sri Lanka’s debt restructuring under the principle of fair burden-sharing.

Over 80 percent of the sovereign debt of 121 developing countries comes from multilateral financial institutions and commercial creditors, making them the main lenders who bring repayment pressures to developing countries, Wang said, citing World Bank statistics.

African governments owe three times more debt to Western banks, asset managers and oil traders than to China, and are charged double the interest, according to research released by British NGO Debt Justice in July 2022.

Western creditors, on the pretext of protecting their credit ratings, have consistently refused to participate in debt reduction efforts, Wang said.

Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times that China has taken a responsible attitude over the debt issue of developing countries and regions, and it has never attached any political strings to its loans, unlike Western developed countries.

Some Western financial institutions have been lending to developing countries based on their own interests instead of the actual needs and situations of the borrowers, Dong said, urging them to redress the unreasonable patterns of lending so as to help the people of the developing countries.

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