The Paris Club members also urged China, among other official bilateral creditors, to do the same in line with the IMF programme parameters as soon as possible….reports Susitha Fernando
Paris Club creditors, while providing financing assurances to support the International Monetary Fund’s (IMF) approval of an Extended Fund Facility (EFF) for Sri Lanka, appreciated India’s specific and credible financing assurances issued earlier and its coordination with the Club.
The Paris Club is a group of officials from major creditor countries whose role is to find co-ordinated and sustainable solutions to the payment difficulties experienced by debtor countries.
Sri Lanka President’s media division announced on Tuesday that Sri Lanka’s bilateral official creditors, which are Paris Club members including Japan, France, Korea, Germany, the US, Spain, the Netherlands, Russia, Sweden, Austria, Canada, the UK, Denmark, Belgium and Australia, have assured to support the IMF’s approval of $2.9 billion conditional financial assistance, which came as a relief for the cash-strapped island nation.
“To support the implementation of the envisaged IMF supported programme and the Sri Lankan authorities’ efforts with other official bilateral creditors, Paris Club members, jointly with Hungary, expressed their full commitment to negotiate with Sri Lanka’s terms of restructuring their eligible claims, in accordance with the comparability of treatment principle among all bilateral creditors, and with the goal of restoring debt sustainability with due regard to targets and overall macro economicgoals under the EFF,” Paris Club said in a statement, adding, “The members further expressed appreciation for the specific and credible financing assurances issued by India on January 16, and its coordination with the Paris Club.”
The Paris Club members also urged China, among other official bilateral creditors, to do the same in line with the IMF programme parameters as soon as possible.
Paris Club members had held a meeting on January 25 in the presence of representatives from Hungary, Saudi Arabia, the Kuwait Fund for Arab Economic Development and India, as well as from the International Monetary Fund and the World Bank, to provide financing assurances to support the approval by the IMF executive board of the envisaged IMF programme for Sri Lanka, which would allow to restore the country’s macro economic stability.
The members had examined the macroeconomic and financial situation of Sri Lanka, including its long-term debt sustainability, and the need for a debt treatment by all bilateral creditors to both fill the financing gap and to ensure Sri Lanka’s debt sustainability in line with the proposed Extended Fund Facility.
“We acknowledge that Sri Lankan authorities had the opportunity to present their economic and financial situation to its creditors, which underscored its need for debt treatment from all the creditors. They also presented their reform programme that will be supported by an IMF arrangement requiring debt treatment to restore debt sustainability, as well as the prior actions already implemented,” the Paris Club stated.
“Paris Club members as well as Hungary, Saudi Arabia and India continue to look forward to working together along with all bilateral creditors and to engage with other key stakeholders in order to proceed with a comparable debt restructuring as soon as possible,” the statement added.
“Shortly after the conclusion of a staff-level agreement between the Sri Lankan authorities and IMF staff on September 1, 2022, on a 48-month EFF arrangement, the Paris Club publicly stated its readiness to provide the necessary financing assurances in a timely manner and in coordination with other bilateral official creditors. To this end, the Paris Club has been engaging proactively with Sri Lankan authorities, the IMF, other official bilateral creditors, including by sharing its technical analysis in order to enhance the bilateral official creditors’ collective understanding of the need for debt treatment,” it said.