Sri Lanka's creditors agree to coordinate over debt restructuring

Japan and other major creditors to Sri Lanka agreed Tuesday to coordinate over the South Asian nation's debt restructuring in their first talks under a new framework.

While China, Sri Lanka's biggest lender, was invited to join the framework, it took part as an observer, Masato Kanda, Japan's vice finance minister for international affairs, said after the meeting.

The meeting, co-chaired by Japan, India and France, came after the three announced the framework's launch in April after Sri Lanka defaulted last year.

At the inaugural meeting of senior officials from 27 nations, which include 19 creditors, Sri Lanka reaffirmed its commitment to ensuring debt transparency, Kanda said.

Officials of the creditor nations are expected to step up negotiations over how Sri Lanka's debt restructuring should take place.

A major focal point has been whether China would formally join the meeting. As of the end of September last year, Sri Lanka had $35.1 billion in foreign debt, with Japan and India following China as major creditors, according to the Japanese Finance Ministry.

"We have been asking China to formally participate, so we would welcome it if Beijing does," Kanda told reporters, adding that the debt issue is urgent.

Faced with debt woes exacerbated by the COVID-19 pandemic, Sri Lanka has secured a $3 billion loan from the International Monetary Fund.

© Kyodo News