Saudi Arabia’s Finance Minister Mohammed al-Jadaan has urged countries to show “love” to China instead of “antagonizing” them, as he discussed the challenges of debt relief for low-income countries. Al-Jadaan made the remarks at a virtual meeting of the G20 finance ministers and central bank governors on Thursday.
China’s Role as a Major Lender
China is one of the world’s largest creditors, lending billions of dollars to developing countries for infrastructure projects under its Belt and Road Initiative. However, some of these countries are facing difficulties in repaying their debts, especially amid the COVID-19 pandemic and the global economic slowdown.
According to the World Bank, 60% of all lower-income countries are in debt distress, or at a high risk of debt distress, meaning they are unable to make their loan repayments. Some of these countries have debts to China equivalent to more than 10% of their annual economic output (GDP).
China has faced criticism for its lending practices, accused of creating “debt traps” that leave borrowers vulnerable to political pressure from Beijing. However, China has denied this allegation, saying that its loans are based on mutual benefit and respect.
Saudi Arabia’s Proposal for Debt Relief
Saudi Arabia, which holds the rotating presidency of the G20 this year, has proposed a framework for debt relief for low-income countries, known as the Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative (DSSI). The DSSI was launched in April 2020 to provide temporary relief to 73 eligible countries by suspending their debt payments to official bilateral creditors until June 2021.
The Common Framework aims to go beyond the DSSI by providing deeper and more comprehensive debt restructuring for countries that request it. It also seeks to involve private creditors and multilateral lenders, such as the World Bank and the International Monetary Fund (IMF), in the process.
However, the implementation of the Common Framework has faced some challenges, as some countries are reluctant to participate for fear of losing their credit ratings or access to financial markets. Moreover, some creditors, such as China and private lenders, have not fully complied with the DSSI or the Common Framework, raising concerns about transparency and fairness.
Saudi Finance Minister’s Appeal for ‘Love’ to China
In his speech at the G20 meeting, al-Jadaan said that countries must work together to find solutions for the debt problems of low-income countries. He said that countries must show “love” to China instead of “antagonizing” them, as he praised China’s role in supporting the global economy and fighting the pandemic.
He also said that countries must respect China’s sovereignty and interests, and avoid interfering in its internal affairs. He said that China is a “very important partner” for Saudi Arabia and the G20, and that he hopes to strengthen cooperation with China in various fields.
He added that he hopes that China will join the Common Framework and contribute to its success. He said that he believes that China will act responsibly and constructively in addressing the debt issues of low-income countries.
