Global Courant 2023-04-14 10:22:23
It remains uncertain whether China, Sri Lanka’s largest bilateral creditor, will join Japan’s initiative.
Japan, India and France have announced a common platform for talks between bilateral creditors to coordinate the restructuring of Sri Lanka’s debt, a move they hope can serve as a model for solving the debt problems of middle-income economies.
However, it remains uncertain whether Sri Lanka’s largest bilateral creditor – China – will join the initiative of Japan, the chairman of this year’s G7, to launch a series of meetings between Sri Lanka’s creditors.
“To be able to start this negotiation process and bring together such a broad group of creditors is a historic achievement,” Japanese Finance Minister Shunichi Suzuki said at a briefing on Thursday.
“This commission is open to all creditors,” he said, expressing hope that China would join the effort.
France’s Director-General of the Treasury, Emmanuel Moulin, told the briefing that the group was ready to hold the first round of talks “as soon as possible”.
The governor of Sri Lanka’s central bank told Reuters news agency earlier this week that having a single platform for conversations would be a welcome step that would make it easier to discuss and share information.
“I hope the establishment of this platform will become a model case” for debt restructuring of middle-income countries, Suzuki said.
Japan’s top currency diplomat Masato Kanda told reporters the group has sent an invitation to all Sri Lanka’s bilateral creditors, including China, and hopes to hold the first round of talks as soon as possible.
“The start of a coordinated effort … to address Sri Lanka’s distress means we have made a crucial policy adjustment” with the International Monetary Fund (IMF), said Sri Lanka’s President Ranil Wickremesinghe, who also the Minister of Finance, via video conference.
The island nation of 22 million last month secured a $2.9 billion program from the IMF to tackle its massive debt burden. But the middle-income economy could not apply for relief under the G20’s common debt treatment framework, which focuses only on low-income countries.
That prompted the major economies to come up with an alternative plan, leading to the creation of the new platform.
Sri Lanka owes $7.1 billion to bilateral creditors, according to official government data, with $3 billion to China, followed by $2.4 billion to the Paris Club and $1.6 billion to India.
The government must also renegotiate more than $12 billion in Eurobond debt with foreign private creditors and $2.7 billion in other commercial loans.
Sri Lanka started talks this month to rework some of its domestic debt and aims to finalize the deal in May.
(TagsToTranslate)Economy
