Finance minister Nirmala Sitharaman on Thursday held several bilateral meetings with her counterparts, including US Treasury Secretary Janet Yellen, and pledged to work in coordination to address global debt vulnerabilities and issues concerning crypto assets and strengthen multilateral development banks.
These issues are likely to figure prominently at the G20 meeting of finance ministers and central bank governors in Bengaluru on Friday-Saturday. India, the chair of G20 for 2023, is backing the implementation of the Common Framework intended to deal with insolvency and protracted liquidity problems, along with the implementation of an IMF-supported reform programme in debt-stressed countries.
G20 official creditors — both traditional ‘Paris Club’ creditors, such as France and the US, and new creditors, such as China and India, which overtook the Paris Club as lenders in the last decade — agreed to coordinate to provide debt relief consistent with the debtor’s capacity to pay and maintain essential spending needs. The Common Framework requires private creditors to participate on comparable terms to overcome collective action challenges and ensure fair burden sharing.
Amid food and energy shortages for their population due to dwindling forex reserves and debt repayment obligations, India’s neighbours Sri Lanka, Bangladesh and Pakistan have sought a bailout from the IMF over the past year to tide over their economic hardships.
“I will continue to push for all bilateral official creditors, including China, to participate in meaningful debt treatments for developing countries and emerging markets (EMEs) in distress,” Yellen said.
The US treasury secretary also thanked India for taking a leadership role on promoting sovereign debt restructuring, while encouraging faster G20 efforts on existing debt restructuring cases. Besides Yellen, Sitharaman also held bilateral meetings with her counterparts including from Japan, the UK, Spain and Indonesia.
In a separate tweet on Sitharaman’s meeting with her Japanese counterpart, the Indian finance ministry said the ministers exchanged views on priorities under G20 Finance Track 2023.
“Both Ministers looked forward to close cooperation between Japan as #G7 Presidency and India as #G20 Presidency on strengthening of #MDBs, #debt related issues, financing cities of tomorrow and coordinated policy for #CryptoAssets,” it said.
Canadian deputy PM & minister of finance Chrystia Freeland in her meeting with Sitharaman said that the pension funds in Canada were aware of the safety and opportunity of investing in India, and will approach its National Investment and Infrastructure Fund (NIIF) for the same. “The two Ministers had a productive discussion on important global economic issues. They also discussed about the upcoming 12th India UK Economic and Financial Dialogue in 2023. The two leaders also discussed #GlobalDebt vulnerabilities and ongoing geopolitical tensions,” the ministry tweeted after Sitharaman met with UK Chancellor of the Exchequer Jeremy Hunt.
Finance Track is at the core of the G20 process and provides an effective forum for global economic discourse and policy coordination. The main workstreams in Finance Track are the global economic outlook and risks, international financial architecture including development finance and global financial safety net, financial inclusion and other financial sector issues, among others.