US Treasury Secretary Janet Yellen on Thursday expressed concern that Chinese creditors could benefit from international financial aid to poor countries.
She said during a hearing before the US House of Representatives, “We would be very concerned to see the resources provided to these countries used to pay off debt to China, which is against the goal of the program.”
And China is the first creditor of African countries whose debts rose dramatically during the “Covid-19” pandemic. The suspension of debt repayment provided a space for the most indebted countries, with the next step being to cancel part of it. The G-20 succeeded in persuading China and private creditors to participate in the upcoming debt renegotiation.
“We talked to China about their participation and they promised to participate as a full partner in these talks” about religion, Yellen said.
But she regretted “the presence of creditors in China that provide loans, but they did not participate fully in these efforts.”
She added, “This raises our concerns, and we talked with China about this,” noting the need to adopt transparency “which constitutes an important way to verify that funds are not transferred” from their original destination. In 2013, China launched the “New Silk Roads”, which aims to build infrastructure abroad and expand its influence.
Yellen appealed to Congress to release aid money to poor countries in the face of the debt burden. She added that international financial institutions “need additional support, especially since the United States has not always contributed to the level of its promises.”
“We have more than $2.7 billion in commitments that we haven’t met… and that amount will go up unless Congress appropriates the money to meet our commitments,” she added.
She went on to say: “The pandemic has caused great damage to the finances of these countries, and if they want to improve their conditions, they must work on indebtedness. The United States was the first to create these “programs,” but we have to fund them now.
Through the Group of Twenty, the World Bank and the International Monetary Fund began in the spring of 2020, the initiative to suspend debt service for dozens of low-income countries, a mechanism that expires at the end of the current year.