(Reuters) – Sri Lanka will ask Japan to invite the country’s main creditor nations, including China and India, to talks on bilateral debt restructuring as it seeks a way out of its worst economic crisis in decades, its president said on Thursday.
Someone needs to call in, invite the main creditor nations. We will ask Japan to do it, President Ranil Wickremesinghe told Reuters in an interview, adding that he would travel to Tokyo next month to meet Prime Minister Fumio Kishida.
Udeeshan Jonas, chief strategist at Colombo-based investment bank CAL Group, said Wickremesinghe’s outreach to Japan could help secure additional funds after once a restructuring plan is agreed.
“As one of the Quad countries, Japan can bring India and the rest of the key bilateral creditors together and Sri Lanka can work on a restructuring plan that will cover a large part of the debt,” Jonas said, referring to the Quad grouping of the United States, Japan, Australia and India.
“Only China will be on the other side,” he said.
Wickremesinghe said talks were ongoing with China, and that they had been positive so far. Sri Lanka’s total bilateral debt was estimated at US$ 6.2 billion at the end of 2020 by the IMF, according to a March report, with Japan and China holding the largest shares.
This year alone, India has poured in around US$ 4 billion to help keep Sri Lanka’s economy afloat, mainly through credit lines and swaps.
Sri Lanka also has US$ 14 billion of international sovereign bond debt. Besides seeking help from its allies, Sri Lanka is also negotiating with the International Monetary Fund (IMF) for a loan package worth between US$ 2 billion and US$ 3 billion, Wickremesinghe said.
