China to stay out of Sri Lanka’s creditors’ platform

Subject : International Relations

Section: Groupings

Concept :

China “will not join” the official creditors’ platform negotiating a common debt treatment plan with Sri Lanka, but Colombo is “very confident” of Beijing’s bilateral support to the island’s economic recovery, Foreign Minister Ali Sabry said.
China has attended the committee’s meetings as an observer, but its decision to stay out of the official creditors’ committee complicates the exercise for Sri Lanka, especially with other creditors repeatedly underscoring creditor equitability.
While private creditors holding International Sovereign Bonds (ISBs) have the largest share of Sri Lanka’s forreign debt, China is the is_land’s bilateral lender, followed by Japan, and India.

Background

Common platform – India, Japan and France

Japan, India and France have announced a common platform for talks among bilateral creditors to coordinate restructuring of Sri Lanka’s debt.
The move is expected to serve as a model for solving the debt woes of middle-income economies.
Japanese Finance Minister Shunichi Suzuki told a briefing that to be able to launch this negotiation process with such a broad-based group of creditors is a historical outcome. He said this committee is open to all creditors.
French Director General of the Treasury Emmanuel Moulin told the briefing that the group is ready to hold the first round of talks as soon as possible.

Paris Club

The Paris Club is a group of mostly western creditor countries that grew from a 1956 meeting in which Argentina agreed to meet its public creditors in Paris.
It describes itself as a forum where official creditors meet to solve payment difficulties faced by debtor countries.
Their objective is to find sustainable debt-relief solutions for countries that are unable to repay their bilateral loans.
Members:
The members are: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Israel, Japan, Netherlands, Norway, Russia, South Korea, Spain, Sweden, Switzerland, the United Kingdom and the United States.
All 22 are members of the group called Organisation for Economic Co-operation and Development (OECD).