COLOMBO (NewsRadio); Sri Lanka is expected to benefit from another proposal by India which will be presented when the Finance Ministers and Central Bank Chiefs from the Group of 20 are set to convene next week.
The government of India is reportedly drafting a proposal for G20 nations to help debtor countries such as Sri Lanka, severely hit by the economic fallout from the COVID-19 Pandemic and Ukraine war by asking lenders, including China, which is the largest sovereign creditor of the world to take a large haircut on loans.
The Finance Ministers and Central Bank Chiefs from the Group of 20 are set to meet in Bangalore next week. The meeting will be the first significant event of India’s one-year presidency of the G20, a team comprised of the biggest economies of the world.
On Tuesday, the IMF – International Monetary Fund stated that it would hold an online meeting with the World Bank, China, India, Saudi Arabia, the US, as well as other wealthy Group of Seven (G7) democracies to try to achieve understanding about common standards, principles and definitions for how to restructure distressed nation debts.
The Indian officials stated that China and other G20 nations knew that India was working on a proposal. As per Indian media reports, the People’s Bank of China and the Finance Minister have not immediately responded to requests for comments on this issue.
The Indian government expects the US to be one of the major backers of its proposal.
Earlier, the US Treasury officials stated that they were opposed to the demand of China that multidimensional development banks also take haircuts on debt principal in any restructurings.
It is not clear whether the Indian proposal would advocate multilateral lenders taking haircuts.
Two of the neighbouring countries of India, Sri Lanka and Pakistan, are in an economic crisis and seeking international help before they run out of foreign currency to pay for necessary imports.
Moreover, India and the Paris Club of creditors told the IMF that they supported the debt restructuring plan of Sri Lanka as the country sought a USD2.9 billion loan.
The US said earlier this month that it was willing to play its part but that they needed to see specific and credible assurances that China would meet the IMF standard of debt relief.