G20: Little encouragement from China on common debt recast principle, source says

Leaders of G20 member nations will meet in New Delhi in September.

Members of the G20 continue to face resistance from China on the issue of a common debt restructuring principle, a source aware of developments said on July 16.

According to the person, the approach in the G20 meetings has been to let all players involved come together and come to some sort of common understanding – be it about loans given to governments from other governments or entities.

"In this, there is some not-so-encouraging response from China. But we are all working on it," the source said on condition of anonymity.

The source, however, added that all was not lost and China's willingness to come on board for the Chair's Summary that was issued following the second meeting of the G20 Finance Ministers and Central Bank Governors was crucial. As such, China is expected to participate in the third meeting of Finance Ministers and Central Bank Governors in Gandhinagar on July 17 and July 18, the source added.

Debt relief and restructuring of vulnerable countries is one of the key issues that India has been pushing under its Presidency of the G20. Speaking to reporters earlier today on July 16, US Treasury Secretary Janet Yellen said that she will push for "full and timely participation" of all bilateral official creditors on pending debt restructuring cases. While Yellen said she was pleased with the progress made in the case of Zambia, it had taken "too long".

"We should apply the common principles we agreed to in Zambia's case in other cases – rather than starting at zero every time. And we must go faster," Yellen had said in her statement, adding that releasing a 'user guide' for borrower countries would provide crucial clarity and predictability about the debt treatment process.

As per the source mentioned above, while a common understanding was crucial to resolving the debt issue, a 'one-size-fits-all' approach had to take into account every country's position and as such had to be "a bit open".

"We have not arrived at any formula," the source added.