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U.S. says it is open to extending G20 debt framework to other countries

FILE PHOTO: George Washington is seen with printed medical mask on the one Dollar banknotes in this illustration taken, March 31, 2020. REUTERS/Dado Ruvic/Illustration

WASHINGTON (Reuters) - The United States is open to extending a joint framework for debt treatment agreed Friday by G20 finance officials for the world’s poorest countries to include middle-income countries and small island states, a senior U.S. Treasury official said.

However, that view is not shared by all members of the Group of 20 major economies at this stage, the official said.

“We’re very open to extending this to other countries,” the official told reporters. “It’s a framework that, in our view, could apply to low-income countries, as well as middle-income countries, small island states.”

G20 countries on Friday agreed for the first time on a common framework for restructuring the government debts given that the COVID-19 pandemic is exacerbating the problems of poor countries that were already facing crushing debt levels before the outbreak.

The World Bank, International Monetary Fund and finance ministers from many middle-income countries have argued the G20’s debt relief initiative must be extended to include countries that are not currently eligible.

The U.S. endorsement marks a substantial step forward in that push.

The senior U.S. official called the common framework a historic achievement that brought creditors such as China, India and Turkey into a coordinated debt restructuring process, along with the Paris Club of official bilateral creditors.

But he said the United States would be monitoring its implementation carefully, with a big focus on China, which has sharply increased lending in the past 20 years. Estimates of total Chinese lending ranged from $350 billion (265.8 billion pounds) to upwards of $1 trillion, the official said.

“We certainly will be monitoring closely exactly how it works in practice, and with a particular eye on Chinese participation,” the official said. “It’s really the lack of transparency on Chinese debt that allows them to, in some cases, game the system and avoid full participation.”

Reporting by Andrea Shalal and Rodrigo Campos; Editing by Kirsten Donovan and Steve Orlofsky

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