Developing countries’ debt troubles in focus at G20 talks, says Germany’s Lindner

© Reuters. FILE PHOTO: German Finance Minister Christian Lindner speaks in Stuttgart, Germany, January 6, 2023. REUTERS/Andreas Gebert/File Photo

BERLIN (Reuters) – The outlook for the global economy and the situation of highly indebted countries will be the main topics of discussion at the Group of 20 (G20) meetings taking place this week in India, German Finance Minister Christian Lindner said on Monday.

“China in particular plays an important role here,” Lindner told Reuters in an interview. China is by far the largest creditor for many highly indebted countries in Africa and Asia, and has been repeatedly pressed to make concessions.

G20 finance ministers and central bank chiefs will meet from Feb. 22 to Feb. 25 to discuss growing debt troubles among developing countries triggered by the pandemic and the war in Ukraine.

Highly indebted developing countries must retain access to international financial markets so that they can continue to import energy and food, Lindner said. 

India has drafted a proposal for G20 countries to help debtor nations by asking big lenders including China to take a large haircut on loans.

India supports a push by the International Monetary Fund (IMF), the World Bank and the United States for the so-called Common Framework (CF) – a G20 initiative launched in 2020 to help poor countries delay debt repayments – to be expanded to include middle-income countries.

Lindner argued that the framework should be tested with poorer nations before it is expanded to middle-income countries. “We can’t take the third step without taking the second,” he said.

However, Lindner added that he sees a lot of potential in the CF, which is why all stakeholders must now be brought to the table to jointly decide which instrument to choose.

No country can avoid responsibility, he said, without explicitly mentioning China.

Just days before the first anniversary of Russia’s full-scale invasion of Ukraine, Lindner praised the unity among Western nations in supporting Ukraine, both financially and militarily. “This unity has surprised the Kremlin in particular. And we need to maintain that clarity,” he said.