Japan, India And France Open A Common Platform to Co-ordinate Sri Lanka's Debt

Japan, India, and France announced on Thursday a common platform for bilateral creditors to coordinate debt restructuring in Sri Lanka, a move they hope will serve as a model for resolving the debt woes of middle-income economies.

However, it is unclear whether Sri Lanka's largest bilateral creditor, China, will join the initiative launched by Japan, this year's G7 chair, to kick off a series of meetings among Sri Lanka's creditors.

"To be able to launch this negotiation process with such a diverse group of creditors is a historic outcome," Japanese Finance Minister Shunichi Suzuki said at a press conference.

"This committee is open to all creditors," he said, expressing hope that China will participate.

Emmanuel Moulin, the French Director General of the Treasury, told the briefing that the group was ready to hold the first round of talks "as soon as possible."

Earlier this week, Sri Lanka's central bank governor told that having a single platform for talks would be a welcome step that would make it easier to discuss and share information.

Suzuki stated, "I hope that the creation of this platform will become a model case" for debt restructuring in middle-income countries.

Masato Kanda, Japan's top currency diplomat, told reporters that the group has sent invitations to all of Sri Lanka's bilateral creditors, including China, and hopes to hold the first round of talks as soon as possible.

The International Monetary Fund last month approved a $2.9 billion programme to help the island nation of 22 million people deal with its massive debt burden. However, the middle-income economy was unable to apply for relief under the G20's common framework for debt treatment, which only applies to low-income countries.

This has put the onus on major economies to devise an alternative scheme, resulting in the development of the new platform.

According to official government data, Sri Lanka owes $7.1 billion to bilateral creditors, with $3 billion owed to China, $2.4 billion owed to the Paris Club, and $1.6 billion owed to India.

The government must also renegotiate more than $12 billion in eurobond debt with foreign private creditors, as well as $2.7 billion in other commercial loans.

Sri Lanka began talks this month to restructure a portion of its domestic debt and hopes to complete the deal by May.