Yellen Critiques China’s Lending Practices Ahead of Global Economic Meetings
Treasury Secretary Janet L. Yellen has criticized China’s “opaque” lending strategies, calling for global financial institutions and other creditors to expedite debt relief efforts for low- and middle-income nations. Her statements were made in an interview on Monday, just days before the annual meetings of the International Monetary Fund (IMF) and the World Bank, where policymakers from around the globe are convening in Washington during a crucial time for the world economy.
While inflation rates have shown signs of easing, ongoing conflicts in the Middle East pose a significant risk of destabilizing energy markets. Many poorer economies are grappling with high interest rates, which hinder their ability to pursue essential development initiatives amid escalating debt challenges. Ms. Yellen emphasized, “It’s a considerable burden that can obstruct investments aimed at fostering sustainable development, addressing pandemics, or tackling climate change.”
In recent years, the IMF and the World Bank have come under fire for their slow response in assisting struggling economies. Critics argue that their demands for economic reform, including severe spending cuts, have often led to social unrest and public resistance.
During a speech scheduled for Tuesday, the Treasury Secretary is expected to acknowledge the progress made by multilateral institutions like the IMF and the World Bank under the Biden administration. She will point to improvements such as an expansion of lending capacity and expedited approval of new projects.
However, the issue of global debt remains pressing. The United States is advocating for a more comprehensive international debt relief initiative that extends beyond the immediate needs of countries on the verge of defaulting on their loans.