Yellen appeared before the House Financial Services Committee, defending a proposal to bolster the government’s participation in the IMF’s New Arrangements to Borrow program to ensure financial support for the organization’s resources. Yellen also requested authorization to extend financing to the IMF’s two critical trust funds—the Poverty Reduction and Growth Trust and the Resilience and Sustainability Trust—and bolster U.S. involvement in the African Development Fund and the International Development Bank.In recent years, as part of its Belt and Road Initiative (BRI), Beijing has served as a substantial lender to many poor countries, such as Ghana and Sri Lanka. But a chorus of U.S. officials, including the Treasury secretary, have expressed growing concern about how China engages with impecunious countries, eventually leaving them trapped in significant levels of debt without achieving the broader aim of economic development.
It’s estimated that the People’s Bank of China maintains a 5 percent interest rate on its loans. This is higher than the IMF’s 2 percent.
Experts say that the Chinese government has initiated restructuring discussions with its borrowers, but Rep. French Hill (R-Ark.), vice chair of the House Financial Services Committee, said that China keeps dragging out these talks.