Sri Lanka’s dire inability to make repayments on its enormous national debt has led the Paris Club of creditor nations to suggest a 10-year moratorium for the country, together another 15 years of debt restructuring, in order to save the bankrupt South Asian nation from further economic and financial collapse, the Hindustan Times reported.
While the Paris Club is still to formally reach out to India and China, two of Sri Lanka’s biggest creditors with Beijing holding near 50 per of external debt, Colombo on its part is still to initiate a formal dialogue with the Xi Jinping regime and the chances of getting extended fund facility of USD 2.9 billion approved from IMF executive board this month range from very low to non-existent.
This means that Sri Lanka will have to wait for the March IMF meeting of the IMF before any aid is extended by the Bretton Woods institution.
While Sri Lanka owes some USD 800 million in structured debt to India, the Modi government has provided emergency aid to the tune of 4 billion USD to the Island nation to tide over its economic crisis. China, Chinese Exim, and China Development Bank hold billions of US dollar debt with Sri Lanka with the total external debt of the Island nation touching nearly USD 40 billion.