G7 Finance Officials Discuss U.S. Debt Limit
At a recent G7 meeting in Japan, finance officials discussed raising the U.S. debt limit to avert the negative consequences of a potential first-time default on U.S. government debt.
Yellen Urges Congress to Raise Debt Limit
U.S. Treasury Secretary Janet Yellen warned of financial catastrophe if Congress fails to raise the $31.4 trillion debt limit. She urged the Republican-controlled House of Representatives to lift the federal debt limit to prevent such a crisis.
Addressing High Debt Overhang and Boosting Growth
G7 meetings also focused on increasing productivity and growth and dealing with the high debt overhang many countries currently face. Malpass expressed concern over the impact of high debt levels on developing nations and global growth rates.
Debt Restructuring Urgency and Progress
The World Bank President emphasized the urgency of debt restructuring for countries struggling to service their debts. He pointed out progress made with Ghana, the fourth country to seek relief under the Group of 20 Common Framework.
Slow Pace of Sovereign Debt Restructuring
Malpass expressed frustration at the slow progress of sovereign debt restructuring, noting countries' difficulty in attracting investment once such agreements are concluded and implemented.
New Global Sovereign Debt Roundtable Developments
The World Bank President mentioned the progress made during the first two meetings of the new Global Sovereign Debt Roundtable, which includes China, the world's largest sovereign creditor, and private sector creditors. A third meeting is planned for June.