To help Sri Lanka in restructuring debt, Japan, India to set up creditors meet

Washington: Japan is expected to play a crucial role in setting up a meeting of creditor countries to promote the debt restructuring of crisis-hit Sri Lanka. Japan in sync with India and France and other lenders are likely to announce the plan on Thursday, according to a report by Nikkei (Asia). Sri Lanka’s largest bilateral lender, China, will also be invited to the meeting of creditors. Japanese Finance Minister Shunichi Suzuki and senior officials from India and France will participate in the inaugural event. Sri Lankan President Ranil Wickremesinghe is expected to join the meeting virtually. The meeting could also serve as a precedent for solving the debt problems of middle-income nations, which often escalate due to higher interest rates in the United States and Europe. Apart from the lender countries, the International Monetary Fund (IMF), World Bank and other global financial organizations as well as private sector entities will participate in the island nation’s debt restructuring discussions. The timing of the first meeting will be decided eventually. Tourism, which is often touted as Sri Lanka’s chief revenue generator fell sharply after the Covid-19 pandemic stopped global travel. Unable to repay infrastructure funds borrowed from China and other countries, the nation fell into default in May 2022. China as of last June held 52% of Sri Lanka’s bilateral debt. Japan was the second largest creditor, at 20%, followed by India at 12% and France at 3%. In 2023, China has not reduced or waived Sri Lanka’s debt. This has led to severe delay in the debt restructuring of the island nation. But, China did offer assurances in March that it would work out debt treatment for Sri Lanka in the months ahead, allowing the South Asian island to secure a crucial $2.9 billion bailout from the IMF. China has still not confirmed whether it will participate in the multilateral discussions led by Japan. In 2020, the influential Group of 20, made up of industrial and emerging-market nations, introduced a common framework to address emerging economies’ debt problems. The framework allows for partial debt forgiveness under the leadership of the IMF and other organizations, but only low-income countries are eligible. Read all the Latest News , Trending News , Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.