By: Staff Writer
Colombo (LNW): A committee of Sri Lanka’s official bilateral creditors, of which China is yet to formally join, expressed broad agreement to provide debt relief to the debt-ridden nation, in its first official meeting held this week, following the country’s assurances on transparency and equal treatment to all creditors.
“The creditor committee for Sri Lanka will pursue its work to find an appropriate solution to Sri Lanka’s external debt vulnerabilities, consistent with the parameters of the IMF programme,” the Paris Club said in a statement after the committee’s first meeting held on Tuesday.
The official creditor committee is formed by 17 countries and is co-chaired by India, Japan and France.
China, which has not joined as an official member of the committee, participated in the meeting as an observer, along with Saudi Arabia and Iran.
During the meeting, the IMF and World Bank representatives presented the latest macroeconomic developments regarding Sri Lanka and the current status of their engagement with the country.
The creditor committee reiterated its invitation to China and other bilateral official creditors to formally join it while stressing on the equal treatment to all creditors.
“It stresses the importance for private creditors and other official bilateral creditors of Sri Lanka to provide a debt treatment on terms at least as favourable as the ones agreed by this creditor committee, in line with the comparability of treatment principle.
It reiterates its invitation to other bilateral official creditors to formally join the creditor committee,” the statement said.
The government recently revealed its plan to hold separate debt restructuring talks with China, following China’s reluctance to join the official creditor committee.
However, the committee acknowledged the assurances given by President Ranil Wickremesinghe to all the official bilateral creditors on transparency and equal treatment in the debt restructuring process.
“The creditor committee takes note of the open letter addressed by the President of Sri Lanka to all its official bilateral creditors on March 14, 2023, assuring transparency and comparability of treatment for all external creditors and ensuring that no side arrangements inconsistent with comparability of treatment will be made with any creditor,” it stated.
Sri Lanka is expecting US $16.8 billion in external debt relief in order to return to the path of debt sustainability,
By end of 2022, the debt stock of central government and guaranteed SOEs stood at US $45.5 billion, of which US $30.8 billion amounting is considered for debt restructuring, excluding multilateral loans, new loans and bilateral swap lines.
The government expects to finalize the restructuring exercise of external debt (both bilateral and foreign) by September this year.
