Paris Club for 10-year moratorium on SL’s debt; global north and south to take haircut

Putting equal onus on rich global north and developing global south, the Paris Club creditor nations are proposing a 10-year moratorium on Sri Lankan debt and another 15 years of debt restructuring as a formula to resolve the current financial crisis in the island nation, states Hindustan Times.

It said while the Paris Club is still to formally reach out to India and China, two of Sri Lanka’s biggest creditors, 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 $ 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, the report added. 

That said, fact is that for Sri Lanka to revive, creditors will have to take a huge hair cut with Paris Club clearly hinting that global south should also take the same cut as global north notwithstanding the inequitable distribution of wealth. The report said Sri Lanka will need bridge funding to sustain the next three month before the IMF Executive Board meeting in March 2023. 

(Source: https://www.hindustantimes.com/world-news/paris-club-for-10-year-moratorium-on-colombo-debt-global-north-and-south-to-take-haircut-101670053382948.html)