Leika Kihara & Jorgelina do Rosario
WASHINGTON, D.C. (Reuters) – Japan, India, and France announced on Thursday a common platform to facilitate bilateral talks between creditors in order to coordinate the restructuring of Sri Lanka’s debt. They hope that this will serve as a template for middle-income countries struggling with debt.
China, Sri Lanka's largest bilateral creditor, is yet to join the initiative of Japan, the G7 Chair this year, which aims to kick-start a series meetings between Sri Lankan creditors.
Shunichi Suzuki, the Japanese Finance Minister, said at a press briefing that "to be able launch this negotiation process with such a broad group of creditors" is an historical result.
He said, "This committee is available to all creditors."
Emmanuel Moulin, Director General of France's Treasury, told the press briefing that they were ready to start the first round "as quickly as possible."
Sri Lanka's Central Bank Governor told Reuters this week that a single platform would be a welcomed move, as it would make sharing information and discussing issues easier.
Last month, the island nation with 22 million inhabitants received a $2.9 billion program from the International Monetary Fund in order to reduce its massive debt burden. The G20's framework for debt treatment, which only targets low-income economies, does not allow middle-income economies to apply for relief.
It is now up to major economies to create a new platform.
Sri Lanka is owed $7.1 billion by bilateral creditors according to data released by its government. Of this amount, $3 billion is owed to China. Next, $2.4 billion goes to the Paris Club, and then $1.6 billion goes to India.
The government must also renegotiate with private creditors abroad more than 12 billion dollars in eurobonds, as well as $2.7 billion worth of commercial loans.
Sri Lanka began talks this month to restructure a part of its domestic credit and hopes to complete the deal by May.