Aurelia Butler

WASHINGTON (Reuters) – As the world’s dominant creditor, China must demonstrate leadership in addressing the growing debt problem facing many low-income and emerging market countries around the world, this year’s leader of the Group of 20 finance officials told Reuters.Indonesian Finance Minister Sri Mulyani Indrawati, speaking in an interview on Friday, welcomed news that China would join a creditor committee for Zambia, one of three countries that has sought debt relief under the G20 Common Framework agreed with the Paris Club of official creditors.Indrawati said there was still work to do to move forward with Zambia’s long-stalled debt process, and other countries would also need debt relief and restructuring in the future.”There will more cases coming,” Indrawati said. “At some point China has to recognize that they need to step up to actually take that kind of leap, and providing the platform for all creditors to be able to discuss … how this restructuring is going to be real.”International Monetary Fund Managing Director Kristalina Georgieva on Thursday said China had committed to joining Zambia’s creditor committee amid complaints from Zambia’s finance minister about delays to its debt restructuring.Zambia became the first COVID-19 pandemic-era default in 2020 and is buckling under a debt burden of almost $32 billion, around 120% of its gross domestic product.Georgieva, U.S. Treasury Secretary Janet Yellen and others have called for moves to accelerate the debt restructuring process and make it more efficient.Ethiopia and Chad also signed up to the Common Framework more than a year ago and have yet to receive debt relief.China, which has become the world’s largest creditor, has been reluctant to move forward with restructuring deals, according to Western officials.Indrawati said G20 members made clear their concerns about the need to jump-start the slow-moving debt restructuring process during this week’s spring meetings of the IMF and World Bank members, with some 60% of low-income countries now in or at high risk of debt distress.”After a lot of the discussion, especially about the role of China, in the end they agreed to make the creditor committee,” Indrawati said. “That’s progress.” “Because they are becoming very important and dominant, they also need to have the ownership as well as leadership on how this kind of situation needs to be solved,” she added.Indrawati said the Paris Club could provide a reference, but it was up to current creditors – including China – to agree on how to treat countries that can no longer service their debts. She said she was optimistic that G20 members would make progress on adjusting the Common Framework to become more effective over the course of the year. (This story corrects to remove extraneous word from first paragraph) More

WASHINGTON (Reuters) – Indonesian Finance Minister Sri Mulyani Indrawati on Friday joined a growing chorus of officials calling for reforms aimed at better equipping the World Bank to address mounting global challenges such as climate change and the changing nature of its clients.”We cannot be using the same business-as-usual,” Indrawati, a former managing director and chief operating officer of the multilateral development bank, told Reuters in an interview. “If you ask whether it needs change, yes.”Indrawati’s comments came a day after both U.S. Treasury Secretary Janet Yellen and a top White House adviser called for major reforms at the World Bank, and major public and private groups also said urgent reforms were needed.Yellen and the White House adviser argued that the seven-decade-old institution was not built to address multiple and overlapping global crises, including the COVID-19 pandemic, Russia’s war in Ukraine, and climate change.Indrawati on Friday noted that the World Bank faces far larger and more global challenges than it was created to address, and its client base has been changing to include more middle-income countries.Civil society groups, developing countries and academics are also clamoring for an overhaul of the “Bretton Woods” institutions, a reference to the conference held in that New Hampshire town in 1941 that led to the creation of the International Monetary Fund and the World Bank.The public and private groups that called on Thursday for reforms, also said that the infusion of far more private capital was needed to address the multiple, overlapping crises now pushing 250 million people back into extreme poverty.”In the past, the World Bank’s strength has really been related to the country operations, but when you talk about global public problems, you cannot just talk with a client based on jurisdiction or sovereignty,” Indrawati said. Indrawati, this year’s chair of the Group of 20 finance officials, said changes were needed to ensure the World Bank has the scale and resources needed to address myriad global crises, and to respond more quickly when crises emerged.The World Bank’s lending totaled $99 billion in fiscal 2021, but experts estimate trillions of dollars are needed to help countries adapt to changing climate conditions, address rising poverty and prepare for future pandemics.To help finance the work needed, it would be vital to leverage public resources and attract more private capital, Indrawati said, citing Indonesia’s use of “blended finance” to bring together money from the government, multilateral institutions, bilateral lenders and the private sector. More

CARTAGENA (Reuters) – Candidates most likely to win Colombia’s presidential elections on Friday agreed for the need to reform the country’s unbalanced pension system so that it provides greater coverage for millions of poor people and redirects subsidies.Ideas for financing the reform ranged from a bulky tax reform to more radical plans such as using savings from private funds to pay the pensions of older adults who have not managed to save enough for their retirement, among others.Colombia’s public pensions are beset by the need to expand coverage while contending with a shortfall of more than $11.3 billion dollars a year which the government must cough up to ensure payments to the 2.4 million people affiliated with the system.Left-wing candidate Gustavo Petro, who leads election polls has proposed using pension savings from private funds to help finance pensions in the public system and pay bonuses to some 3 million people who do not have enough for retirement.Private pension funds manage assets worth around $92 billion dollars, equivalent to almost 30% of the country’s annual gross domestic product (GDP).According to Petro’s manifesto, the right to a pension “will be a collective state guarantee based on social solidarity and not on the private appropriation of benefits to the detriment of the savings of all Colombians.” The proposal has raised fears among economists.Second-favorite Federico Gutierrez, the center-right candidate, proposed maintaining the mixed public and private system while eliminating subsidies worth $5.3 billion dollars for high-value savings funds and redirecting them to those who do not have pensions.”There are big reforms that are absolutely necessary,” Gutierrez said during the annual congress of the pension fund association Asofondos in the Caribbean city of Cartagena. “The big reforms have to happen in the first year,” he added.Centrist candidate Sergio Fajardo proposed supporting the 3.6 million adults aged over 65 without a pension or income with payments worth some $133 a month. The plan would need some $4.79 billion to finance and Fajardo, who is fourth in the polls, would fund the move by pushing a tax reform worth $8.78 billion through Congress, he said. “People cannot take anymore,” Fajardo said, recognizing citizens’ unhappiness with the pension system. More