US’ interest rate hikes worsen debt problems for some: Chinese FM Spokesperson

By Staff Reporter | Gwadar Pro Mar 31, 2023

BEIJING, Mar. 31 (Gwadar Pro) - “Since last year, the US has resorted to unprecedented massive interest rate hikes, making the debt problems of certain countries even worse. The US needs to take concrete steps to help developing countries, rather than point fingers at others,” said Chinese Foreign Ministry Spokesperson Mao Ning at a regular press conference on Thursday.

She made these remarks after U.S. Treasury Secretary Janet Yellen said that the US is working hard to counter China’s influence in international institutions and in lending to developing countries, and that by lending to developing countries, China leaves them trapped in debt.

“China has always carried out investment and financing cooperation with developing countries based on international rules and the principle of openness and transparency. We never attach any political strings, or seek any selfish political interests,” pinpointed Mao, adding that China has been helping developing countries relieve debt burdens, and made the biggest contribution to implementing the G20 Debt Service Suspension Initiative.

“We reject the unjustified accusation from the US,” Mao noted.

World Bank statistics show that multilateral financial institutions and commercial creditors, accounting for more than 80% of the sovereign debt of developing countries, are the biggest source of stress on developing countries in terms of debt payment. 

Take Pakistan, one such developing country, as an example. According to the latest reports, the foreign exchange reserves held by the State Bank of Pakistan (SBP) fell by $ 354 million during last week due to external debt servicing.

According to weekly foreign exchange report issued Thursday,  SBP’s reserves decreased to $ 4.244 billion as of March 24, 2023 down from $ 4.6 billion on March 17, 2023. The decline in the SBP’s reserves is because of external debt payment.

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