To solve the debt problems of middle-income economies, Japan, India, and France

 Creating a single platform for Sri Lankan creditors with Japan, India, and France.

 

To solve the debt problems of middle-income economies, Japan, India, and France have created a unified forum for talks among bilateral creditors to coordinate the restructuring Sri Lanka's debt. The participation of China, Sri Lanka's largest bilateral creditor, in the effort announced by Japan, the G7 chair for this year, to begin a series of meetings among Sri Lanka's creditors, is still up in the air.

 

Shunichi Suzuki, the Japanese finance minister, said at a briefing on Thursday, "To be able to start this discussion process, gathering such a broad-based group of creditors, is a historic outcome. He stated, "This committee is open to all creditors," and expressed the hope that China will participate.

 

During the briefing, Emmanuel Moulin, the director general of the French Treasury, stated that the group was prepared to begin the first round of negotiations "as soon as possible." Earlier this week, the governor of Sri Lanka's central bank told the Reuters news agency that establishing a single forum for discussions would be a good step that would make it simpler to talk about and share information.

 

Suzuki stated, "I hope the development of this platform will become a model case" for the debt restructuring of middle-income nations. Masato Kanda, the top currency diplomat for Japan, told reporters that the group has invited each of Sri Lanka's bilateral creditors—including China—and intends to begin the first round of negotiations as soon as practical.

 

President and finance minister of Sri Lanka Ranil Wickremesinghe made the statement through video conference. "The beginning of a coordinated effort... to address Sri Lanka's distress means we have made a critical policy adjustment" with the IMF. The 22 million-person island nation last month received $2.9 billion in assistance from the IMF to help it deal with its massive debt load. However, because only low-income nations are the focus of the G20's common framework for debt treatment, the middle-income economy was not eligible to request relief.

 

Due to this, major economies are now under pressure to devise a substitute plan, which has resulted in the development of a new platform. According to official government figures, Sri Lanka owes $7.1 billion to bilateral creditors, of which $3 billion is owed to China, $2.4 billion to the Paris Club, and $1.6 billion to India. Additionally, the government must renegotiate $2.7 billion in additional commercial loans as well as more than $12 billion in Eurobonds with foreign private creditors. Sri Lanka began negotiations this month to restructure a portion of its domestic debt, and it intends to complete the agreement by May.

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