This week, Treasury Secretary Janet Yellen referred to China as a “block” to debt reform in Africa; Chinese authorities in Zambia responded sharply by advising her to first take care of her own affairs.
The biggest contribution the United States can make to the debt problems outside the country, according to the Chinese Embassy in Zambia, is to implement responsible monetary policies, deal with its own debt issue, and stop actively undermining other sovereign nations’ efforts to address their debt problems.
Republicans in the House of Representatives are putting the Biden administration and Democrats under pressure to reduce spending by threatening to abstain from voting on a new debt ceiling, which reflects money that has already been spent and is now owed by the government.
The Biden administration has so far refused to engage in negotiations, betting that conservative Republicans will budge in response to pressure from industry, investors, and moderates.
The overall amount of U.S. debt is approximately $31 trillion, up significantly from $5.6 trillion in 2000, in part due to higher spending for an aging population, expenditures for the wars in Iraq and Afghanistan, COVID-19 initiatives, and tax cuts that reduced revenues.
To emphasize the necessity of debt reform in Africa, Yellen and IMF Managing Director Kristalina Georgieva arrived in Zambia separately.
Zambia made its debt due in 2020 but has made little headway too far in restructuring it with Chinese and private creditors, which has contributed to the country’s inhabitants living in poverty.
In 2022, the world’s poorest nations will have to pay $35 billion in debt service to public and private creditors, more than 40% of which would be owed to China, according to the World Bank.
The American Federal Reserve’s rate rises, which are intended to curb domestic inflation, and the strengthening currency have increased the expense of debt payment for African nations, the African Development Bank reported last week.
