If you ask US Treasury Secretary Janet Yellen, the debt problems facing low-income countries are a problem for the global economy.
What happened: The world’s wealthiest countries are reportedly dragging their feet on restructuring the mounting debt load they’re owed by low-income countries, per Reuters.
- The first day of a finance meeting between G20 countries failed to deliver a plan to help out those struggling countries, and several finance ministers didn’t show up.
Why it matters: High interest rates around the world have put highly indebted nations in a bad spot, creating a cycle in which debt loads can scare away public and private investment.
- The world’s 91 poorest countries will spend 16% of their government revenues servicing foreign debt this year, per the Financial Times.
Catch-up: Yellen’s idea was to urge G20 nations to let low-income countries restructure their debt and provide borrowers with clarity about how such restructuring plans should work.
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She said a recent deal between Zambia’s creditors (mostly China) to pay US$6.3 billion in debt should be an example for helping nations like Ghana and Sri Lanka.
- The suggestion failed to pick up traction with ministers-in-attendance from Canada, Japan, Australia, Indonesia, South Korea, Indonesia, South Africa, the US, and India.
Bottom line: As G20 nations face their unique economic challenges—from high inflation in Argentina to riots in France—they’re opting to put their own oxygen masks on first.—SB