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Wednesday, May 29, 2024

India, Japan, France announce new platform to restructure SL’s debts

As India, Japan and France to announce a new platform for creditors to coordinate restructuring of Sri Lanka's debt on Thursday, China called on all island nation's creditors to share burden.

Colombo:

As India, Japan and France to announce a new platform for creditors to coordinate restructuring of Sri Lanka’s debt on Thursday, China called on all island nation’s creditors to share burden.

“We call on commercial and multilateral creditors to take part in Sri Lanka’s debt restructuring based on fair burden-sharing,” China’s Foreign Ministry spokesperson Wang Wenbin said while adding the Beijing would work with relevant countries and international financial institutions to jointly play a positive role in helping Sri Lanka navigate the situation, ease its debt burden and achieve sustainable development.

Wenbin was responding to a question raised at a media briefing in Beijing on Wednesday.

However Japanese Finance Minister Shunichi Suzuki who announced that Japan, France and India would disclose the new platform for creditors to coordinate Sri Lanka’s debt restructuring had invited China to join their efforts.

“We altogether made a great effort to set up the framework… I hope many countries will participate. It will be very nice if China will join,” Suzuki has told media on Wednesday.

The new platform initiated by Japan, the chair of this year’s G7 meeting, G20 chair India and France aim to address debt vulnerabilities of middle-income countries such as Sri Lanka.

At the press briefing China’s Foreign Ministry spokesman had also reminded about the extension on Sri Lanka’s debt service due in 2022 and 2023, an announcement made by China’s Exim Bank in February.

“Sri Lanka will not have to repay the principal and interest due of the bank’s loans during the above-mentioned period, so as to help relieve Sri Lanka’s short-term debt repayment pressure; meanwhile, the bank would like to have friendly consultation with Sri Lanka regarding medium- and long-term debt treatment in this window period; and the bank will make best efforts to contribute to the debt sustainability of Sri Lanka,” the Chinese spokesman said.

The response from China, Sri Lanka’s largest bilateral creditor came following Sri Lanka’s Central Bank head, told that the Indian Ocean Island was awaiting China’s support in its effort to restructure debts and start repayment.

While attending the International Monetary Fund and World Bank’s Spring Meetings, Central Bank Governor, Nandalal Weerasinghe told media that the country aims to quickly complete negotiations with official and commercial creditors.

Suffered with repeated debacles including the Easter Sunday attack in 2019 and pro-longed Covid-19 pandemic, Sri Lanka went through a severe financial crisis which lead to a political turmoil in 2022.

Facing severe shortages of all essential items including food, fuel, medicines, people took to streets and toppled the government lead by Gotabaya Rajapaksa as the President and his elder brother Mahinda as the Prime Minister.

In April 2022, for the first time in history, Sri Lanka defaulted its debt repayment of $7 billion that was due for the year.

Former opposition MP, Ranil Wickremesinghe took over the country and stopped major imports, introduced economic restrictions and raised taxes in order to secure $2.9 billion bailout package by the IMF.

Sri Lanka plans to announce its debt-restructuring strategy with commercial creditors during April. IANS

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