Innovative Solutions Sought to Prevent Global Debt Crises
U.S. Treasury's Jay Shambaugh urges new liquidity support methods to help low- and middle-income countries avoid debt crises. He advocates for development of new mechanisms by the IMF and MDBs to assist countries facing temporary financial pressures without hindering sustainable growth. Criticism of China's economic strategies also highlighted.
In a pivotal appeal, Jay Shambaugh, the U.S. Treasury's undersecretary for international finance, has called upon the International Monetary Fund (IMF) and multilateral development banks (MDBs) to devise innovative methods for short-term liquidity support. Speaking at an Atlantic Council event, Shambaugh outlined the urgent need for these institutions to assist countries with manageable but pressured debts.
Shambaugh emphasized that a blend of support from bilateral, multilateral, and private sector sources is crucial. He urged the development of mechanisms to ensure countries committed to sustainable development receive financing without undermining crucial investments. The undersecretary hopes for significant advancements during the IMF and World Bank annual meetings.
Highlighting global concerns, Shambaugh criticized China's economic policies, particularly recent manufacturing subsidies. He warned such strategies could lead to export spillovers and are ineffective without strong domestic demand. Shambaugh stressed that China's approach might restrict development paths for countries aiming for growth through low-cost manufacturing.
(With inputs from agencies.)
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