Amid Pakistan crisis, IMF says China should change its loan policy as low-income countries can't pay

 

Kristalina Georgieva, Managing Director of the International Monetary Fund, has said that debt reduction is necessary for highly indebted countries.

International Monetary Fund (IMF) Managing Director Kristalina Georgieva said in an interview with CBS's 60 Minutes on February 5 that China's finance minister and central bank governor will hold a meeting with other creditors and other borrowing countries on India in February. Will participate in the Round Table Conference.

On 3 February, the IMF said that China needed to take additional steps to resolve its real estate issues. About a quarter of China's GDP comes from the real estate sector, which has slowed the country's economic expansion, especially as Beijing began cracking down on developers' heavy reliance on debt in 2020. In the past few months, the Chinese authorities have begun to ease up. Funds limit for industry.

Georgieva, the IMF's first director from a developing market economy, has said that debt reduction is necessary for highly indebted countries to prevent social service cuts and other negative effects. According to him, the first such event will coincide with the conference of a group of 20 finance executives in India.

"We are working to bring all creditors, traditional creditors from advanced economies, China, Saudi Arabia, India, as well as new creditors like the private sector, and put them on the table with the debtor countries," he said.

Georgieva said that China should change its policy as low-income countries are unable to pay. His comments came in the wake of a massive ₹900 billion financial shortfall in the IMF-Pakistan talks. Despite the IMF's call for a 1% increase in the GST rate for items containing fuel, oil and lubricants, Islamabad is resisting fiscal rebalancing as a way to reduce the primary deficit.


The Revised Circular Debt Management Plan (CDMP) has been requested by the Pakistani authorities, who have also requested that the IMF reduce the required additional subsidy to ₹605 billion from its original target of ₹687 billion. As a result, the fiscal shortfall was in the range of ₹400–450 billion.