Everyone has to take a haircut: India on Chinese debt

Several countries are reeling under Chinese debt and India says Beijing needs to come out and say what the debt is

New Delhi, Feb 14: Everyone has to take a haircut, India has said while commenting on countries being mired in Chinese debt.

China needs to come out openly and say what their debt is and how to settle it, Amitabh Kant the Sherpa for India during its presidency of the Group of 20 Forum said.

It cannot be that the International Monetary Fund (IMF) takes a haircut and it goes to settle Chinese debt, How is that possible? Everybody has to take a haircut, he also said.

The comments were made while referring to China not willing to take losses on loans to struggling economies. India also asked the world's biggest bilateral creditor to developing nations to avoid taking positions that would block relief for nations such as Zambia and Sri Lanka.

IMF data shows that about 60 per cent of the world's poorest nations are in or at high risk of debt distress. The G-20 has set up a blueprint for restructuring struggling countries' loans, known as the Common Framework which brings the Paris Club of traditional rich debtor countries together with China to try and restructure the debts of low-income countries on a case-by-case basis.

Western lenders, including the Paris Club of Creditors have asked China to stop going solo on debt relief. Beijing has called for debt of multilateral lenders to be included in the restructuring of struggling nations' loans. This has been firmly rejected by the World Bank.

To deal with global debt issues, the International Monetary Fund, World Bank and India will host the inaugural meeting. The meeting would bring together creditors including China with borrowing countries to try to find solutions for nations with unsustainable debt.

Talks in this regard will be held before the meeting of G-20 nations' fiscal and monetary leaders in Bengaluru.

A Bloomberg report said that the 75 poorest nations owed their creditors $326 billion at the end of 2021.

Debt recast will be one of the issues, which India will focus on its draft communique following the G-20 meeting, Kant had said in an interview on Monday.