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Washington: India, Japan, and France have announced a common platform for talks among creditors to address the debt restructuring programme of Sri Lanka which is grappling with its worst economic crisis. The representatives of the three creditor countries, including Finance Minister Nirmala Sitharaman, held a press briefing on the margins of the annual spring meetings of the World Bank and the International Monetary Fund (IMF) in Washington on Thursday.
"The purpose of the event was to demonstrate the multilateral cooperation regarding the debt restructuring process among the creditors, together with Sri Lanka," said an official statement.
Finance Minister Sitharaman expressed India's commitment to support Sri Lanka in dealing with its current economic crisis. She emphasised that collaboration among creditors was important to ensure transparency and equality in the debt restructuring discussions. Sri Lankan President Ranil Wickremesinghe joined the conference virtually.
Japanese Finance Minister Shunichi Suzuki described the launch of the common platform as a historical development. "To be able to launch this negotiation process gathering, such a broad-based group of creditors, is a historical outcome," he said at the news conference. "This committee is open to all creditors," he added, voicing hope that China, Sri Lanka's biggest creditor, will join the initiative launched by Japan, this year's G7 chair.
French Director General of the Treasury Emmanuel Moulin also joined Sitharaman and Suzuki at the press conference. Joining the launch of the debt restructuring negotiation process virtually, President Wickremesinghe said Sri Lanka remains committed to engage with all creditor nations and other stakeholders in a transparent manner based on the principles of comparable treatment.
Wickremesinghe said that he would present in Parliament the agreement with the IMF for the USD 2.9 billion bailout, gain approval and bring in legislation to ensure its implementation, his office said. Wickremesinghe's office said that India's Finance Minister Sitharaman had called for close coordination among creditors which was critical to restoring Sri Lanka's debt sustainability. She stressed India's commitment to facilitating an early debt restructuring process, it said.
Meanwhile in Beijing, Chinese Foreign Ministry spokesman Wang Wenbin, when asked that Sri Lanka and its major lenders have formally launched talks at the high-level meeting in Washington on the country's debt issues, said Beijing supports its financial institutions in working out a solution to resolve Sri Lanka's financial crisis.
"China calls upon commercial and multilateral creditors take part in the restructuring of Sri Lanka's debt and to share the burden in a fair manner. We support Chinese financial institutions in working out a solution with the Sri Lankan side," Wang said.
Early this week, Sri Lanka's Central Bank Governor Nandalal Weerasinghe said Sri Lanka expects China to support its effort to restructure debts and help it begin repaying its obligations. Reacting to Weerasinghe's remarks, spokesman Wang said on Wednesday that Beijing has already committed to waive the principal and the interest of the debt for two years. "As a bilateral official creditor, the Export-Import Bank of China has clearly stated in the financing support document issued to the Ministry of Finance of Sri Lanka that it will extend the maturity of Sri Lanka's debts due in 2022 and 2023", Wang said.
"During this period, Sri Lanka will not have to repay the principal and interest of the loan. Help Sri Lanka ease short-term debt repayment pressure", he said. "Eximbank is willing to use this window period to negotiate a medium- and long-term debt disposal plan with Sri Lanka in a friendly manner and do its best to promote Sri Lanka to achieve debt sustainability," Wang said.
Sri Lanka secured a USD 2.9 billion programme from the International Monetary Fund (IMF) last month to tackle its huge debt burden. The Washington-based global lender had made Sri Lanka's debt restructuring a prerequisite for granting the USD 2.9 billion bailout.
The IMF's Executive Board approved a 48-month extended arrangement under its Extended Fund Facility (EFF) with an amount of SDR 2.286 billion to Sri Lanka following financing assurances from the creditors. Sri Lanka, which drew its first tranche of the USD 3 billion bailout programme, has already met an instalment to pay back an Indian line of credit which the island nation obtained early last year just before announcing the debt default.
The IMF bailout, the 17th in Sri Lanka's history, was approved following prolonged discussions over Colombo's unsustainable debt. Sri Lanka owes USD 7.1 billion to bilateral creditors, with USD 3 billion owed to China, USD 2.4 billion to the Paris Club and USD 1.6 billion to India, according to official data from its government.
The island nation was hit by an unprecedented financial crisis in 2022, the worst since its independence from Britain in 1948, due to a severe paucity of foreign exchange reserves, sparking a major political and humanitarian crisis in the island nation.
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