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Yellen says ‘concerned’ debt relief could aid Chinese lenders

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US Treasury Secretary Janet Yellen, pictured in London on June 5, 2021, has supported efforts to provide debt relief to poor countries./AFP
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Jun 11, 2021 - 10:18 AM

WASHINGTON — US Treasury Secretary Janet Yellen said Tuesday she was concerned that Chinese lenders could benefit from an international debt relief initiative aimed at poor countries.

In April, G20 countries including the United States agreed to extend until December a moratorium on debt interest payments for the poorest nations, amid fears they will lag behind in the global recovery from the coronavirus pandemic.

Chinese financial institutions are among the top lenders to lower-income countries, and Yellen told a House Appropriations subcommittee that she aims to ensure the relief — meant to help poor countries spend to revitalize their economies after the pandemic — doesn’t end up in China’s hands.

“We have spoken with China about their participation. They have promised to participate as equal partners in these debt frameworks,” she told lawmakers.

“We would be very concerned to see the resources that are provided to these countries used to repay Chinese debt. That would defeat the purpose of the programs.”

In prepared remarks before the committee, Yellen also encouraged the US Congress to allocate money to the debt relief measure, which is being implemented by the IMF and World Bank.

Of the 73 countries eligible for debt relief, 47 have asked to participate in the program, and are expected to save $7.3 billion in debt payments between the start of the year and June 30, according to the World Bank.

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