As a solution to the debt problems facing middle-income nations, Japan, India, and France on Thursday agreed a unified forum for negotiations among bilateral creditors to coordinate the restructuring of Sri Lanka's debt.
The participation of China, Sri Lanka's largest bilateral creditor, in the effort announced by Japan, the G7 chair for this year, to begin a series of meetings among Sri Lanka's creditors, is still up in the air.
"To be able to launch this negotiation process gathering such a broad-based group of creditors is a historical outcome," Japanese Finance Minister Shunichi Suzuki said at a briefing.
"This committee is open to all creditors," he said.
At the briefing, Emmanuel Moulin, the director general of the French Treasury, stated that the group was prepared to begin the first round of negotiations "as soon as possible."
Earlier this week, the governor of Sri Lanka's central bank told Reuters that establishing a single forum for discussions would be a positive step that would make it simpler to talk about and exchange information.
Last month, the 22 million-person island nation received a $2.9 billion program from the International Monetary Fund to help it deal with its massive debt load. However, because only low-income nations are the focus of the G20's common framework for debt remedies, the middle-income economy was not eligible to ask for relief.
Major economies were forced to devise an alternate plan as a result, which gave rise to the new platform.
According to official government figures, Sri Lanka owes $7.1 billion to bilateral creditors, of which $3 billion is owing to China, $2.4 billion to the Paris Club, and $1.6 billion to India.
Additionally, the government must renegotiate $2.7 billion in additional commercial loans as well as more than $12 billion in eurobond debt with foreign private creditors.
Sri Lanka began negotiations to restructure a portion of its domestic debt this month with the goal of concluding the agreement by May.