IMF has ‘strong’ partnership with China, says Georgieva

 BLOOMBERG

The International Monetary Fund (IMF) and China have a “strong partnership,” the organisation’s chief, Kristalina Georgieva, said as she wrapped a visit to the biggest lender for many developing economies and a key player in talks about their debt and financial stability.
“In a world where so many countries are vulnerable to the impact of the Covid and world shocks, it is critical that the IMF has the financial strength to help them,” Georgieva said in a video clip posted on Monday on her verified account on Weibo, the Chinese social media platform. “I’m grateful to China for recognising the role of the IMF at the centre of the global financial safety net.”
The IMF’s managing director spent three days in China meeting with top officials including Premier Li Qiang; financial czar and vice premier, He Lifeng; central bank Governor Pan Gongsheng; and Finance Minister Liu Kun.
China’s stance on participating in debt restructuring negotiations has become increasingly important given its role as the largest creditor for many poor nations. The world’s second-largest economy has been at the centre of extensive debate over global debt relief because of its insistence that multilateral lenders like the World Bank take losses on their debt along with all other creditors.
That tension has coloured much of the discussion around debt relief for nations like Sri Lanka, which defaulted last year and is still working through debt-restructuring conversations. China is the country’s biggest bilateral lender.
There have been signs of progress on global debt relief plans with China in recent months. Zambia won major debt relief with a group of creditors led by China and France. In her Weibo video, Georgieva said the China-IMF partnership is “strong” and that the country supports the IMF’s work “tremendously,” without elaborating. She said her talks with Chinese leaders in general were “productive and substantive.”
The two sides also discussed measures Beijing has taken as it strives to achieve a growth target of around 5% this year. The nation’s recovery is slowing, pushing the Chinese government to take more concerted steps to bolster growth. Those steps include easing home purchase restrictions, reducing mortgage rates to help the property market, ramping up its defense of the currency and expanding some tax breaks to households.
It may take some time for the effects of those policy measures to show up in the economic data.
Georgieva said it was “important for China, it’s important for the world” for the nation to achieve its growth goal. “This is one third of global growth,” she said. Georgieva also visited Shanghai and met with Mayor Gong Zheng and Dilma Rousseff, president of the New Development Bank, the Shanghai-headquartered lender launched by BRICS members.