The Minister of Finance minimizes the risks from Evergrande, the Fed moves

The Minister of Finance minimizes the risks from Evergrande, the Fed moves

“I am sure there will be, not specific to one country, but there will be this larger issue of debt sustainability, sovereignty and how smaller countries are facing a very trying and challenging situation when these two extremes are forced upon them,” she said at the opening session at ICRIER’s annual G20 conference.

Without naming China, she also red-flagged a growing trend of smaller countries being driven into a debt trap that threatened their sovereignty.

Highlights

  • ‘Debt trap’

  • Stressing that India and the world had learnt lessons from the 2008 global financial crisis, Ms. Sitharaman said she wasn’t sure if the Evergrande crisis would figure in the upcoming G20 summit. “But without specifically referring to the G20 or any one particular country, it can be seen that globally, the sense of worry may be there but the fear that this is certainly going to hit us, is not there,” she said in reply to a query from NITI Aayog vice chairperson Rajiv Kumar on China’s real estate sector’s challenges spilling over to global markets.

Emphasising that India had learnt its lessons from the way it handled the last taper tantrum which made it one of the ‘fragile five’ economies, she said: “Together with the Reserve Bank of India, we are definitely keeping a watch.”

“Specifically, not Evergrande, but debt sustainability is an issue. Which I am sure every global forum will have to address and talk about; particularly, debts which are being given, which also bring the sovereignty of a nation into the picture and threatens that; then it is a matter of serious concern and many of the countries are sitting up to say: What is happening around in the world?” Ms. Sitharaman remarked.