The Paris Club creditor nations last month reached out to China and India seeking to coordinate closely on Sri Lanka’s debt talks but is still awaiting a reply, Reuters reported on Thursday.
According to a source with direct knowledge of the matter, Paris Club officials reached out to two of Sri Lanka’s biggest bilateral creditors after the crisis-hit nation reached a staff-level agreement with the International Monetary Fund board for a $2.9 billion loan in September.
The source said the Paris Club still hasn’t received a reply from either country, adding that India and China might be at odds on who should take the first step to engage in close coordination with the Paris club on Sri Lanka.
Officials also met with Indian officials in Washington on the sidelines of the annual meetings of the International Monetary Fund and World Bank. Chinese officials were not present in person.
Sri Lanka is grappling with the worst economic crisis in more than seven decades and the country owes close to $14 billion to a wide range of bilateral creditors, of which 66% is owed to non-Paris Club members.
The country also needs to renegotiate around $12 billion with overseas bondholders after defaulting on its international debt earlier this year, according to Sri Lankan government data.
The island nation of nearly 22 million people, is seeking an ad-hoc coordination platform to obtain financing assurances from bilateral lenders, which also include Japan.
As a middle-income country, Sri Lanka is not able to apply for relief under the Group of 20 common frameworks for debt treatment. Its total foreign currency debt of $38.7 billion amounted to 48.2% of GDP, the latest IMF report showed in March. (NewsWire)