Japan, India, France Launch Debt Restructuring Platform for Sri Lanka, China's Participation Uncertain
Date
4/16/2023 2:38:01 AM
(MENAFN) Japan, India, and France have launched a common platform to restructure Sri Lanka's debt among its bilateral creditors, according to reports from Japanese media on Friday. The announcement was made in Washington during the International Monetary Fund and World bank meetings. The move is seen as a significant step in addressing the financial crisis currently faced by the South Asian nation, which has been caused by economic mismanagement and the impact of the COVID-19 pandemic. The new platform is open to all creditors and has been called a "historic accomplishment" by Japanese Finance Minister Shunichi Suzuki.
As of September 2022, Sri Lanka had USD35.1 billion in foreign debt, with 19 percent owed to China, 7 percent to Japan, and 5 percent to India, according to data from Japan's Finance Ministry cited by Kyodo News. However, the participation of China, Sri Lanka's largest bilateral creditor, in the initiative remains uncertain.
Sri Lanka's public debt was at 128 percent of its gross domestic product as of the end of 2022, according to the IMF, which has deemed the country's debt burden "unsustainable." To address this challenge, Sri Lanka received the first USD330 million tranche of the IMF's nearly USD3 billion bailout intended to support the island country.
The launch of the debt restructuring platform by Japan, India, and France is expected to provide much-needed relief to Sri Lanka, which has been struggling to meet its debt obligations. By bringing together multiple creditors to negotiate debt restructuring, the platform aims to provide a coordinated and comprehensive solution to Sri Lanka's debt crisis. However, the participation of China, which holds a significant share of Sri Lanka's debt, will be critical to the success of the initiative.
Policymakers in Sri Lanka will need to continue to work closely with international partners to address the country's ongoing economic challenges and ensure its long-term stability and growth. The launch of the debt restructuring platform is a positive development, but much work remains to be done to ensure that Sri Lanka can emerge from its current financial crisis and build a more resilient and sustainable economy.
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