Sri Lanka’s creditor nations to meet despite uncertainty on China

As Sri Lanka’s creditor nations prepare for their first meeting on Tuesday to co-ordinate restructuring of the Indian Ocean nation’s debt, the focus is turning to whether China will attend.

The meeting, within a new framework launched in Washington D.C. in April that creditors hope will serve as a model to resolve the debt difficulties of middle-income economies, is to be held online.

Japan, which initiated the launch together with India and France, has invited all bilateral creditors, including the largest, China, though Japanese officials said it was uncertain whether it would join the talks.

The reason was not immediately clear, although one of the officials felt Beijing could be weighing the merit of participation.

Last month France, India and Japan unveiled a common platform for talks among bilateral creditors to co-ordinate restructuring of Sri Lanka’s debt.

Sri Lanka owes $7.1 billion to bilateral creditors, government data show, with $3 billion owed to China, followed by $2.4 billion to the Paris Club and $1.6 billion to India.

The government also needs to renegotiate more than $12 billion of debt in eurobonds with overseas private creditors, and $2.7 billion on other commercial loans.

Sri Lanka has kicked off talks to rework part of its domestic debt and aims to finalise the deal by May.

(Reuters)