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HomeEconomyYellen, IMF visit to Zambia reflects concerns over stalled debt talks

Yellen, IMF visit to Zambia reflects concerns over stalled debt talks

By Andrea Shalal

LUSAKA (Reuters) – Two of the world’s most powerful finance officials will visit Zambia this week, reflecting growing concern among Western officials How China and other creditors are handling the debt of African countries.

Zambia has demanded almost two years of debt relief under the common framework group, but progress has been slow at best despite growing urgency China and private sector creditors reach agreement.

U.S. Treasury Secretary Janet Yellen and IMF Managing Director Kristalina Georgieva, frustrated by the delay, said on Sunday. Both sides see the launch of a new sovereign debt roundtable late last year as a way to make progress in the long-stalled debt restructuring process.

While the overlap is a coincidence, the two will meet informally in Lusaka, a finance ministry official said.

Yellen told Reuters en route to Zambia that she supported the roundtable as a forum to discuss general principles of debt relief.

“I think it’s Yellen saying: “It’s a useful approach, and hopefully specific cases are easier to deal with. Panel of Finance Officers. Dates and guest list still being worked out.

Georgieva with World Bank President David Marr Paz, who together helped launch the roundtable, told reporters this month that it aims to address broader issues such as transparency, processing times and how to set loan deadlines, but is not intended to replace the existing common framework.

“Roundtables are a good idea, but expectations should be kept very modest,” World Bank chief economist Indmit Gill told Reuters. More trust, especially with Chinese officials, who are trying to find a common approach among the different lenders.

Mark Sobel, a former senior Treasury official, said roundtables could bring all parties together Talks together, but it’s unclear if it will produce results.

“Roundtable leaders need to have a focused agenda with clear goals and timelines, build a collective spirit and then maintain Pressure on all parties to deliver results,” he said, adding that the Common Framework has so far been “a failure” but remains “the only game in town”.

Relief is urgently needed Debt

Yellen told reporters that when she met with Chinese Vice Premier Liu He in Zurich on Tuesday, she stressed the urgent need to cut the debt of heavily indebted countries and warned that failure to do so would hinder the development of poor countries , and could lead to more wars, fragility and conflict.

According to the World Bank’s Gill, delays in debt processing are taking a toll on Zambia: per capita income has slipped from middle-income to low-income status, About 60% of people are now living in extreme poverty.

“All the bad things that happen when a country defaults on the contract, happen to Zambia,” he Said.

Gill sees parallels to the late 1970s, when the Federal Reserve raised interest rates to curb inflation, sending the U.S. economy into its worst recession since the Great Depression Severe Recession Earl y 1980s.

High interest rates in the U.S. led Latin America into what has been dubbed the “lost decade,” with many countries slipping into default “To some extent, something like that could be happening now,” Gill said. “

However, Yellen noted that interest rates are nowhere near where they were under Volcker and that inflation is not getting out of control.

“We are in an environment of higher interest rates, which is associated with a stronger dollar and weaker currencies in many emerging markets, as well as Japan and other countries,” Yellen said.

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