India, Japan and France announce common platform for Sri Lanka creditors

Subject: International Relations

Section: Grouping

Concept:

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.

Background

The island nation of 22 million people last month secured a 2.9-billion-dollar programme from the International Monetary Fund to tackle its huge debt burden.
But the middle-income economy could not apply for relief under the G-20’s common framework for debt treatments, which targets only low-income countries.
This has put the onus on major economies to come up with an alternative scheme, leading to the creation of the new platform.
Sri Lanka owes 7.1 billion dollars to bilateral creditors, with 3 billion dollars owed to China, followed by 2.4 billion dollars to the Paris Club and 1.6 billion dollars to India, according to official data from Sri Lankan government.

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).