The International Monetary Fund (IMF) on Saturday called for ‘timely and orderly processes’ under a common framework with regards to Sri Lanka’s debt resolution. The island nation faced a severe economic crisis which resulted in high debt.
During 2020, in order to strengthen debt architecture, the G20 initiated Debt Service Suspension Initiative (DSSI) and established the Common Framework (CF) for debt resolution.
“It is now critical to complete Zambia’s debt restructuring, establish a Creditor Committee for Ghana and advance work with Ethiopia.
Nonetheless, more predictable, timely and orderly processes are needed both for countries under the CF and for those not covered by it, including Sri Lanka and Suriname,”
This was disclosed by IMF Managing Director Kristalina Georgieva in a statement issued after conclusion of G20 Finance Ministers and Central Bank Governors (FMCBG) meeting in Bengaluru, under India’s presidency,
Sri Lanka has already fulfilled filled around 15 commitments made to IMF and put forward a debt treatment from work with proposal of immediately restructuring bilateral debt of US, India ,China ,Japan,and Paris club member and non member countries amounting to US$10.81 billion to gain $2.9 billion IMF bail out loan soon.
The G20 Finance Ministers and Central Bank Governors who met in Bengaluru, India from February 24-25, 2023 said that they look forward to a swift resolution to Sri Lanka’s debt situation.
India’s Minister of Finance Nirmala Sitharaman, reading the Chair Summary and Outcome Document of the G20 Finance Ministers and Central Bank Governors (FMCBG) meeting, said that they recognize the urgency to address debt vulnerabilities in low and middle-income countries.
World Bank President David Malpass said that Sri Lanka and other middle-income countries were in need of quick debt restructuring.
“We should work together to achieve solutions – Zambia MoU, Ghana official creditors’ committee, Ethiopia rescheduling, and Sri Lanka financial assurances.
All of which can be done in the next few months if there is agreement at the table,” he said adding that “they look forward to a swift resolution to Sri Lanka’s debt situation.
Meanwhile the United States fears China may use loans to Sri Lanka and Pakistan as leverage for coercion.
US Assistant Secretary for South and Central Asian Affairs Donald Lu said that the US is extremely worried about the possibility that Chinese loans to nations in India’s near neighbourhood will be used as leverage for coercion.
President Ranil Wickremesinghe had this week revealed China’s refusal to agree to the same conditions placed by India and the Paris Club when restructuring Sri Lanka’s debt.
Wickremesinghe said that while the Paris Club agreed to India’s conditions, China refused to do so. Instead China wanted to place its own conditions.
During 2020, in order to strengthen debt architecture, the G20 initiated Debt Service Suspension Initiative (DSSI) and established the Common Framework (CF) for debt resolution.
It is now critical to complete Zambia’s debt restructuring, establish a Creditor Committee for Ghana and advance work with Ethiopia.
Nonetheless, more predictable, timely and orderly processes are needed both for countries under the CF and for those not covered by it, including Sri Lanka and Suriname.
