ECONOMYNEXT – The International Monetary Fund will meet with creditors of Sri Lanka and other debt troubled nations, including China, India and Paris Club to plug gaps in the current debt re-structuring framework, a media report said.
Sri Lanka’s IMF deal is currently in the balance pending an undertaking from China to re-structure debt in line with the requirements of the Fund.
China however has offered a two-year moratorium and offered to discuss more relief during that time without specifically addressing the IMF’s financing envelop in the Sri Lanka program which is at staff level.
The meeting which will take place virtually Friday “aims to address the current shortcomings in debt restructuring,” Bloomberg Newswires reported quoting an IMF spokesman.
The International Monetary Fund, World Bank and India will host the meeting which where China, US, UK, Japan as well as debt troubled nations will participate, the report said
Several countries with market access including Sri Lanka, Ghana defaulted on their external debt, as sovereign bond yields shot up losing the ability to roll-over the bonds exited as the countries experienced severe monetary instability.
External sovereign default started as severe monetary instability hit Latin America in the early 1980s and market access countries led by Argentina experience serial default as their run out of reserves and their currencies collapse.
All attempts to solve the problem in Latin America has failed and several countries have dollarized.
Dollarized Ecuador also re-structured their foreign debt ahead of a default, as yields soared during the Coronavirus pandemic raising doubts about the ability to roll-over its debt.
Ecuador is also due to participate in the talks on Friday the report said. (Colombo/Feb14/2023)