BackAmid Pakistan crisis, IMF says China must change its debt policy as low-income nations cannot pay
International Monetary Fund Managing Director Kristalina Georgieva has stated that debt reduction is essential for highly-indebted countries.
PremiumInternational Monetary Fund (IMF) Managing Director Kristalina Georgieva, in an interview with CBS's 60 Minutes on February 5, stated that China's finance minister and Central bank governor would participate in a roundtable with other creditors and other borrowing countries in February in India.
On February 3, the IMF stated that China had to take additional steps to address its real estate issues. About a quarter of China's GDP comes from the real estate sector, which has slowed the country's economic expansion, particularly after Beijing began to crack down on developers' heavy reliance on debt in 2020. Over the past few months, Chinese authorities have begun to loosen limits on funding for the industry.
Georgieva, the first IMF director from a developing market economy, has stated that debt reduction is essential for highly-indebted countries in order to prevent social service cuts and other negative effects. The first such event, according to her, will coincide with a conference of Group of 20 finance officials in India.
Also Read: Pakistan, IMF talks hit snag over ₹900 billion fiscal gap - Details
"What we are working towards is to bring all creditors, the traditional creditors from advanced economies, new creditors like China, Saudi Arabia, India, as well as the private sector, and put them around the table with the debtor countries," she said.
China must alter its policy since low-income nations are unable to pay, Georgieva said. Her comment comes as a massive fiscal shortfall of ₹900 billion has caused a roadblock in IMF-Pakistan negotiations. Islamabad is resisting the fiscal imbalance as a way to cut the primary deficit, despite the IMF's call for a 1% increase in the GST rate for goods containing fuel, oil, and lubricants.
Also Read: Declare assets of govt officials of grade 17 and above, IMF asks Pakistan
The amended Circular Debt Management Plan (CDMP) has been requested by Pakistani authorities, who also requested that the IMF lower the required additional subsidy from its original objective of ₹687 billion to ₹605 billion. As a result, the fiscal shortfall was in the ₹400–450 billion range.
(With agency inputs)
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