Paris Club Creditors provide financing assurances for Sri Lanka | Sunday Observer

Paris Club Creditors provide financing assurances for Sri Lanka

8 February, 2023

Representatives from the Paris Club, International Monetary Fund, World Bank, Hungary, Saudi Arabia, Kuwait, and India met on January 25, 2023, to provide financing assurances for Sri Lanka.

The meeting was held to support the approval of an Extended Fund Facility by the IMF Executive Board for the country. The representatives examined Sri Lanka’s macroeconomic and financial situation, including its long-term debt sustainability and need for debt treatment from all bilateral creditors. They acknowledged the opportunity given to the Sri Lankan authorities to present their economic and financial situation and their reform program, which will be supported by an IMF arrangement requiring a debt treatment.

Paris Club members expressed their full commitment to negotiating with Sri Lanka the terms of a debt restructuring in accordance with the comparability of treatment principle and to restore debt sustainability. They also urged other official bilateral creditors, including China, to provide financing assurances in line with the IMF program parameters as soon as possible.

In September 2022, a staff-level agreement was concluded between the Sri Lankan authorities and the International Monetary Fund for a 48-month arrangement under the Extended Fund Facility. Paris Club members acknowledged the Sri Lankan authorities’ commitment to seek debt treatment from all its commercial creditors and other official bilateral creditors on terms at least as favourable.

The Paris Club, formed in 1956, is an informal group of official creditors whose role is to find coordinated and sustainable solutions to the payment difficulties experienced by borrower countries. Its members include Japan, France, Korea, Germany, the United States of America, Spain, the Netherlands, Russia, Sweden, Austria, Canada, the United Kingdom, Denmark, Belgium, and Australia.