Andrea Shalal, David Lawder

WASHINGTON, (Reuters) – China is the dominant creditor in the world and it must show leadership to address the rising debt crisis facing low-income countries and emerging markets around the globe, the Group of 20’s finance chief told Reuters.

Sri Mulyani indrawati, Indonesia’s Finance Minister, welcomed the announcement that China would be joining a creditor panel for Zambia. Zambia is one of three countries to have sought relief from debt under the G20 Common Framework.

Indrawati stated that there is still much to be done to progress with Zambia’s debt restructuring and debt relief.

Indrawati indicated that “there will be more cases.” China needs to realize that this is a necessary step to take and to provide the forum for creditors to talk about… what restructuring will be done.

Kristalina Georgieva, International Monetary Fund’s Managing Director, said Thursday that China has committed to join Zambia’s creditor panel. This follows complaints by Zambia’s Finance Minister about the delays in restructuring its debt.

Zambia, which was declared the COVID-19-pandemic-era defaulter in 2020, is now enslaved under an almost $32Billion debt load. That’s 120% of its GDP.

Georgieva, Janet Yellen (U.S. Treasury Secretary) and other advocates called for steps to expedite the process of restructuring debt and make it more effective.

Chad and Ethiopia also signed up for the Common Framework over a year ago, but have not received debt relief.

Officials from Western countries claim that China, the world’s biggest creditor, is reluctant to make any restructuring agreements.

Indrawati reported that G20 member countries raised their concern about how to speed up the slow-moving process of restructuring debt. The meeting was held during this week’s spring meeting of IMF and World Bank members. Some 60% of low-income nations are now at or very high risk for debt distress.

Indrawati stated that “After much discussion, particularly about China’s role, they finally agreed to form the creditor committee.” “That’s progress.”

She said, “Because their dominance is increasing, they need to take ownership and lead in solving this type of problem.”

Indrawati indicated that while the Paris Club may be used as a guide, it would not provide any guidance. It was up to creditors (including China) to determine how they should treat debtor countries. She expressed optimism that the G20 would continue to make improvements on the Common Framework in order for it to be more efficient over the next year.