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Janet Yellen with Zambian President Hichilema
AFTER US Treasury Secretary (finance minister) Janet Yellen called China a ‘barrier’ to debt reform in Africa this week, Chinese officials in Zambia had a pointed response – get your own house in order.
The Chinese Embassy in Zambia said on its website Tuesday ‘the biggest contribution that the US can make to the debt issues outside the country is to act on responsible monetary policies, cope with its own debt problem, and stop sabotaging other sovereign countries’ active efforts to solve their debt issues.’
Republicans in the House of Representatives are using a risky, unusual threat to refuse to vote in a new debt ceiling, a figure that reflects money already spent and now owed by the government, to pressure the Biden administration and Democrats to cut spending programs. So far, the Biden White House is refusing to negotiate, counting on hardline Republicans to step back under pressure from businesses, investors and moderates.
US national debt is about $31 trillion, a figure that has skyrocketed since 2000’s $5.6 trillion thanks in part to increased spending for an ageing population, outlays for Iraq and Afghanistan wars, Covid-19 programmes and tax cuts that trimmed revenues.
Yellen and International Monetary Fund Managing Director Kristalina Georgieva arrived separately in Zambia Sunday to highlight the need for debt reform in Africa, according to Reuters.
Zambia defaulted on its debt in 2020 and has made little progress to restructure it with Chinese and private creditors to date, a situation that has helped pushed citizens into poverty.
The world’s poorest countries faced $35bn in debt-service payments to official and private-sector creditors in 2022, more than 40 percent of which was due to China, the World Bank said.
The US Federal Reserve’s rate increases, designed to tame inflation at home, and the appreciating US dollar have added to African countries’ debt service burden, the African Development Bank said last week.