India, Japan, and France have decided to announce a new platform for creditors to coordinate the restructuring of Sri Lanka’s debt, Japanese Finance Minister Shunichi Suzuki said on Wednesday, further mentioning that it would be “very nice” if China would join the initiative. Last month, Sri Lanka secured a $2.9 billion programme from the International Monetary Fund to tackle its suffocating debt burden and its worst economic crisis in more than seven decades.
According to news agency Reuters, after the Group of Seven (G7) finance leaders’ meeting, Suzuki said in a news conference that the announcement of the new platform, initiated by Japan, France, and G20 chair India, will be made on Thursday.
Being chair of this year’s G7 meeting, Japan took up the initiative to address debt vulnerabilities of middle-income countries such as Sri Lanka as a priority for debate.
The platform will likely include a series of meetings of Sri Lanka’s creditor nations to discuss the debt.
“We altogether made a great effort to set up the framework,” Suzuki said, as quoted by Reuters. “I hope many countries will participate. It will be very nice if China will join,” Suzuki added.
The island country witnessed disrupted imports of essentials from fuel to medicine that caused political turmoil leading to the ouster of then-president Gotabaya Rajapaksa with the ire of protestors directed at the powerful Rajapaksa family.
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China Willing To Negotiate Debt Repayment Plan In “Friendly Manner”: Wang
The initiative comes as China, one of the top lenders to Sri Lanka, on Wednesday said that Beijing was willing to negotiate a medium and long-term debt disposal plan with Colombo in a “friendly manner”. Chinese Foreign Ministry spokesperson Wang Wenbin said Beijing has committed to waiving the principle and the interest of the debt for two years, news agency PTI reported.
“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 in reaction to to reports quoting Governor of the Central Bank of Sri Lanka, Nandalal Weerasinghe, who said that Lanka expects China to support its debt restructuring efforts, and help it begin repaying its obligations.
Wang added that during this period, Colombo would not have to repay the principal and interest of the loan, helping the cash-strapped country ease short-term debt repayment pressure.
“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" the country achieve debt sustainability,” Wang said, as quoted by PTI.