Paris club approaches China, India for Sri Lanka debt overhaul

Paris Club creditors reached out to China and India to coordinate Sri Lanka's debt-restructuring talks, according to a person familiar with the matter, in an attempt to bring major global creditors together to rework the obligations of emerging economies. Coordinating on Sri Lanka may result in the formation of an official creditors committee or simply holding regular meetings to share information on debt treatment, the official said. An Asian diplomat in Colombo, Sri Lanka's capital, confirmed that the Paris Club had been in contact with the country's non-Paris Club creditors. The formation of an official creditors committee in which China and India agreed to work together with the Paris Club would help Sri Lanka secure a $2.9 billion bailout from the International Monetary Fund. Last month, the Paris Club reiterated its willingness to coordinate with non-Paris Club official bilateral creditors "To provide the necessary financing assurances in a timely manner." The framework may provide a model for Sri Lanka in its debt overhaul by bringing bilateral creditors around the same negotiating table. "When you moved from a negotiating framework that involved simply Paris Club and commercial creditor representative committees and you added the non-Paris Club bilaterals - China - it became three-dimensional chess," Lee Buchheit, a veteran of two dozen debt restructurings who's been consulted by the Sri Lankan government, said in a Sept. 14 webinar.