World News | China absent from Sri Lanka debt restructuring meeting in Washington

colombo [Sri Lanka]June 9 (ANI): China’s absence from April’s meeting on Sri Lanka’s debt restructuring in Washington was a sign of growing frustration with Beijing’s handling of the debt problems facing developing countries, the Daily Mirror reported.

An invitation to a Chinese delegation to attend a debt restructuring meeting, particularly to discuss Sri Lanka’s Chinese loan, went unanswered as China chose not to participate. This non-participation sent a clear message that China had no intention of participating in the loan negotiations and expressed frustration at the slow pace of debt restructuring.

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The Washington meeting marked the start of restructuring talks with the Paris Club, Japan and India. The event was aimed at injecting new impetus into Sri Lanka’s debt talks, which have stalled between China and other creditors. It also effectively solves these problems. According to the “Daily Mirror” report, the meeting ended successfully and all parties reached a consensus.

The talks are a step towards a comprehensive deal between Sri Lanka and its creditors. A timetable was established for the completion of the restructuring process.

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Kenji Okamura, deputy managing director of the International Monetary Fund, said that Sri Lanka is in a serious debt crisis, and Sri Lanka needs to solve the debt problem as soon as possible to get out of the crisis.

“We hope that all official bilateral creditors will be involved and that negotiations will proceed smoothly and quickly,” Okamura said, according to the Daily Mirror.

He believes that the most effective way to resolve the crisis is for all official creditors to come together and negotiate a solution that works for both parties. This will allow Sri Lanka to repay its debt and advance its economic development plans.

Also, it will benefit creditors as it will provide them with regular payments and ensure their interests are protected. This is a win-win situation for both parties and will help Sri Lanka regain its footing.

The talks began a day after China agreed to soften some of the demands at a roundtable meeting convened by the International Monetary Fund and the World Bank. According to the Daily Mirror, the roundtable was convened to develop broader guidelines for debt relief for low-income countries.

However, these discussions will continue in the coming months and significant issues remain unresolved. Whether China’s softening stance at the roundtable will secure a debt relief deal remains to be seen. However, the talks are an important step towards resolving the debt crisis.

Looming over these broader talks are concerns about China’s role in negotiations involving countries including Sri Lanka and Zambia. These countries are facing increasing economic pressure due to slow debt resolution. Sri Lanka and other creditors want China to participate. They very much hoped that China would not delay the negotiations any longer.

In any case, Sri Lanka is reluctant to negotiate a separate debt deal with China because that would involve other creditors. That’s because they fear a separate deal will set a precedent. According to the “Daily Mirror”, this means that other creditors may demand similar deals, disrupting negotiations and delaying the resolution of debt problems.

Japanese Finance Minister Shunichi Suzuki said China had been invited to the talks but did not attend.

The Chinese embassy in Washington also declined to respond to a request for comment. The Chinese government has yet to comment on the matter. At the same time, the Japanese side expressed disappointment at the decision of the Chinese government not to participate in the talks. Japan urged China to reconsider its decision and join the talks.

“We very much want China to participate in the negotiations,” Suzuki told reporters. “Negotiations should be conducted on an equal footing, with decisions made after negotiations using transparent debt data.”

Meanwhile, Sri Lanka’s president called on China and other creditors to quickly reach a compromise on its debt restructuring. According to the Daily Mirror, this is an alternative to avoid creating more economic risk.

Sri Lanka is already facing an economic crisis due to the COVID-19 pandemic and financial mismanagement, especially under Gotabaya Rajapaksa’s presidency. Soon after the election, he gave big corporations unprecedented tax breaks. As a result, the government lost a lot of revenue because of the government coffers.

Sri Lanka’s Central Bank Governor Nandalar Velasinghe has called for an early resolution to the restructuring talks. Without restructuring, the country will struggle to service its debts, which could lead to further economic difficulties. It could also negatively impact the country’s credit rating and debt sustainability. Debt restructuring will help the country manage its debt burden in a more manageable and sustainable manner. It would also give it the opportunity to invest in the economic recovery, according to the Daily Mirror.

“It is in the national interest for China and Sri Lanka to complete this process as soon as possible so that we can repay our bad debt,” Wirasingh said in a March interview. “We have to do it as soon as possible.”

According to the International Monetary Fund, Paris Club members, including Japan, have a combined external debt of $4.8 billion, more than 10 percent of Sri Lanka’s external debt. That’s slightly higher than China’s $4.5 billion, while India owes $1.8 billion.

“Given the relationship between Japan, India, the Paris Club and China — and none of them have that much skin in the game — the chances of China joining a group led by them are somewhere between slim and none,” TCW said David Loevinger, a sovereign analyst at the Group and former senior coordinator for China affairs at the U.S. Treasury Department.

Sri Lanka hopes to reach a deal with China to restructure its debt, thereby reducing the bailout burden. However, Sri Lanka has yet to finalize the details of the deal. Until then, the country will continue to rely on an IMF bailout to revive the economy, the Daily Mirror reported. (Arnie)

(This is an unedited and auto-generated story from a Syndicated News feed, the body of content may not have been modified or edited by LatestLY staff)