China attends as observer first meeting of Sri Lanka’s creditor nations

China attended as an observer the first meeting of Sri Lanka’s creditor nations on Tuesday, offering policymakers some hope Beijing will become more engaged in talks to resolve debt woes of low- and middle-income countries across the world.

The meeting, within a new framework launched in Washington D.C. in April that creditors hope will serve as a model to resolve the debt difficulties of middle-income economies, was held online.
 

Japan, which initiated the launch together with India and France, invited all bilateral creditors, including the largest, China.

Masato Kanda, Japan’s top financial diplomat, told reporters after the meeting that China attended as an observer, adding he hoped it would participate as a full member in future meetings.

Last month, France, India and Japan unveiled a common platform for talks among bilateral creditors to co-ordinate restructuring of Sri Lanka’s debt.

Sri Lanka owes $7.1 billion to bilateral creditors, government data show, with $3 billion owed to China, followed by $2.4 billion to the Paris Club of creditor nations and $1.6 billion to India.

The government also needs to renegotiate more than $12 billion of debt in eurobonds with overseas private creditors, and $2.7 billion of other commercial loans.

Sri Lanka has kicked off talks to rework part of its domestic debt and aims to finalise a deal by May.