US Treasury Secretary Janet Yellen said at a summit in Paris that she was encouraged by China’s role in addressing debt challenges facing developing countries after a restructuring agreement in principle was reached for Zambia.
(Bloomberg) — US Treasury Secretary Janet Yellen said at a summit in Paris that she was encouraged by China’s role in addressing debt challenges facing developing countries after a restructuring agreement in principle was reached for Zambia.
French President Emmanuel Macron hosted world leaders over two days including Brazil’s Luiz Inacio Lula da Silva and Cyril Ramaphosa of South Africa, as well as Yellen and the Chinese premier, Li Qiang, to discuss new ways to raise climate financing.
The talks were aimed at building momentum for an overhaul of the global lending architecture so that multilateral institutions like the World Bank can do more to help developing nations deal with climate change and raise private investment. Bloomberg Philanthropies was one of the official sponsors of the Summit for a New Global Financing Pact.
Key Developments:
Yellen Shares Stage With Chinese Premier Amid Thaw in Relations
Zambia Wins Debt Relief, Sets Precedent for Stressed Nations
France’s Macron Champions Global Taxation for Poverty, Climate
Citi Executive Backs Pause Clauses for Some Emerging-Market Debt
Yellen Says US Is Prepared to Consider Global Shipping Tax (1:42 p.m.)
US Treasury Secretary Janet Yellen said French President Emmanuel Macron’s push for a global tax on shipping to help finance fighting poverty and climate change is a “very constructive” suggestion.
“We are very open to innovative approaches and hopefully we have put some on the table ourselves,” Yellen said. “I think I would agree with President Macron’s description of the logic of why it would be appropriate, and it’s something the US will look at.”
Georgieva Says IMF to Boost Trust to Help With Climate Challenges (1:20 p.m.)
The International Monetary Fund will boost a trust that helps countries with climate change challenges by 50% after rich countries met their pledges for channeling resources to the Washington-based institution.
IMF Managing Director Kristalina Georgieva said earlier at the summit that wealthy nations have now met an objective of re-lending $100 billion of reserve assets known as Special Drawing Rights back to the fund. The Resilience and Sustainability Trust is one of the mechanisms the IMF can then use to recycle those SDR.
“We are lifting up our ambitions to increase by 50% the Resilience and Sustainability Trust so we don’t have to ration financing and we can respond to needs,” Georgieva said during the closing news conference at the summit.
Yellen Encouraged by China Role to Address Developing-Nation Debt (1:05 p.m.)
US Treasury Secretary Janet Yellen said she was encouraged by China’s role in addressing debt issues in developing countries.
“I just saw Premier Li at the high-level panel and I’m encouraged that China is moving to help address the debt challenges facing developing countries,” she said during the closing news conference.
Yellen’s comment comes a day after Zambia reached an agreement in principle to restructure its debt with bilateral lenders, a deal the US had argued China was obstructing. She said she was pleased that creditors have come to an agreement “under the leadership of the Chinese and French co-chairs.”
Read More: Yellen Sees Lower Recession Risk, Says Consumer Slowdown Needed
Kenya’s Ruto Says Tensions Between West and China Are Unhelpful (12:55 p.m.)
Kenyan President William Ruto said tensions between rich countries and China are damaging efforts to find ways to urgently build scale of affordable financing for poor countries.
“We also have a wonderful relationship with China: They finance our infrastructure development,” Ruto said at the closing news conference. “The tension between the West and China is unhelpful, is unnecessary, and is as useless as the tension between North and South when we discuss climate change.”
Lula Says Global Inequality Is as Urgent as Climate Change (11:43 a.m.)
Brazilian President Luiz Inacio Lula da Silva urged the international community to address global inequality and treat it like a challenge as important as climate change.
If economic and education inequality are not tackled urgently, climate concerns will become a joke compared with the magnitude of the problems facing the world, he said. Still, Lula insisted that Brazil will meet all its environmental commitments and doesn’t need to “cut trees.”
The Brazilian president took a swipe at the world order, blasting the United Nations and Bretton Woods institutions for being incapable of addressing global issues and assisting those in need. He said global trade should be conducted using a variety of currencies, not only the US dollar.
Lula also criticized the European Union for the so-called side-letter it sent to the Mercosur bloc of South American countries with new demands ahead of a potential trade agreement.
Scholz Calls for Action to Provide Developing Nations With Green Funding (11:20 a.m.)
German Chancellor Olaf Scholz said it’s time for action to provide developing countries with better access to the funds needed to boost investment in the green transition.
“It’s important that we always walk as we talk,” Scholz said at the summit. “So it’s always important that especially the economically more stable and successful countries make their contributions and that they stick to the things they say all the time.”
Scholz said private companies will also play an important role in providing the needed funds and that the G-20 process known as Compact with Africa is key in pushing ahead with reforms on the ground in those countries so that businesses are more willing to invest. Public subsidies alone cannot solve the problem, the chancellor added.
China’s Li Defends Economic Momentum, Rejects De-Coupling Call (10:13 a.m.)
Premier Li Qiang told the summit that the Chinese economy has shown “upward momentum” this year and fundamentals for long-term sound economic development are unchanged.
He reiterated that China opposes de-coupling and said the country’s development isn’t a threat to the world, but a big opportunity instead.
He said China will join hands with other nations on Green development and improving global financial governance, and he urged developed nations to take responsibility on climate change.
New €1.5 Billion Platform Launched for Healthcare in Developing Economies (9:50 a.m.)
A €1.5 billion platform to stimulate investment in primary healthcare in developing economies has been launched by a consortium comprised of the African Development Bank, European Investment Bank, Islamic Development Bank and the World Health Organization.
The platform will offer concessional loans and grants and focus on serving the most vulnerable, according to a statement by the group.
“The climate crisis is a health crisis,” said Vanessa Kerry, director-general special envoy for climate change and health at the WHO. “No country is immune.”
The platform was welcomed by Mia Mottley, prime minister of Barbados. Our task is “about securing a safer world and planet, and that means dealing with global public goods,” she said. “There’s no better way than through primary healthcare.”
ECB’s Lagarde Says Economies Must Be Future-Proof (9:12 a.m.)
Climate change is a key issue for central banks as it affects inflation and their balance sheets, and because it matters for commercial banks under their supervision, European Central Bank President Christine Lagarde said.
“We have made climate change a priority in our strategy,” Lagarde said. “We do that because climate change affects inflation, and inflation is a beast that all central bankers — whether they wear a green jacket or not — want to tame or discipline.”
She added: “We must forge ahead with a global transition to ensure our economies are future-proof.”
Macron Champions Global Taxation for Poverty, Climate (8:51 a.m.)
Emmanuel Macron called for another overhaul of the global taxation system to finance the fight against poverty and climate change, building on recent efforts for a minimum levy on corporations.
The new taxation could hit airline tickets, financial transactions or shipping, the French president said at the summit. For it to be successful, countries would have to work together to avoid businesses relocating activity to avoid national levies, he said.
“A century ago we said socialism in one country doesn’t work — well, international tax in one country doesn’t work either,” Macron said on France Info radio on the sidelines of the summit.
Macron Says France to Channel More IMF Resources to Poor States (8:30 a.m.)
France will boost the volume of International Monetary Fund resources it channels back to the institution for lending to the poorest countries facing climate risks, Emmanuel Macron told France Info radio on the sidelines of the summit.
The French president set a target two years ago to boost financing for poor countries by having the richest lend 20% of their share of IMF reserve assets known as Special Drawing Rights.
“We have pushed everyone to meet their commitments and now we will recycle 40% of our SDR,” he said.
Zambia Wins Debt Relief, Sets Precedent for Stressed Nations (Thursday evening)
Zambia reached an agreement in principle to restructure $6.3 billion of debt with bilateral lenders, setting a precedent for a growing list of countries struggling to service their liabilities. The nation’s dollar bonds rose.
Read More: Zambia Debt Deal Spurs Rally Across Distressed Emerging Markets
On Twitter, Zambian President Hakainde Hichilema called the agreement “a significant milestone in our journey toward economic recovery and growth.”
The accord marks the first major relief won by a developing country under the Group of 20 nations’ Common Framework that brings the traditional creditor nations of the Paris Club around the same negotiating table with China and India.
–With assistance from Natasha White, Samy Adghirni, Li Liu and Michael Nienaber.
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