G20: Positive indicators for China’s economy in 2023

India’s Finance Minister Nirmala Sitharaman, who holds the G20 presidency this year, said China was sending encouraging signals about breaking the deadlock among global creditors on how to manage the debt crisis of poor countries.

In remarks to Bloomberg, the Indian minister added: “We see a positive indicator in China’s handling of the crisis, and therefore they also commit themselves to resolving it.”

Disagreements between traditional creditors such as the Paris Club-wealthy Western countries basically – and new creditors such as China, the largest lender to developing economies, in years – have hampered efforts to restructure these debts and save those economies from crisis.

The failure of cooperation between creditors was a major theme at last week’s spring meetings of the IMF and the International Bank. This included the so-called Global Sovereign Debt Round Table, co-chaired by India, which was widely mandated to find a way forward to resolve the debt-processing crisis among all creditors.

However, there were positive indicators. China has eased its insistence on reducing multilateral lenders such as the World Bank’s debt along with all other creditors. This came amid a clear waiver from the World Bank to boost extremely low interest loans and grants to debt-strapped countries.

More than 70 low-income countries face a debt burden of $326 billion, and more than half are already unable or about to meet their debts, including Ghana, Ethiopia, Sri Lanka and Zambia.