Debt restructuring is a geopolitical issue - Ranil Wickremesinghe at New Global Financing Pact

by Zulfick Farzan 23-06-2023 | 9:03 AM

COLOMBO (News 1st); Sri Lankan President Ranil Wickremesinghe said that the debtor-led appraoch was the key to Sri Lanka's success in securing a bailout program.

"It was our program, not an IMF program," he told the New Global Financing Pact in Paris, France.

At the initiative of its President, France is hosting more than 300 high-level participants, Heads of State including Crown Prince of the Kingdom of Saudi Arabia Mohamed Bin Salman, and Government, international organizations and representatives of civil society.

The Sri Lankan President said he does not agree with the introduction of a common framework in debt restructuring.

"If you have a common framework, what happens is that we move as the fastest as the slowest creditor. So we get tied down. That is why we are not favor of a common framework. We were able to create traction with the most committed creditors raising the general quality and efficiency of the process. We are still frustrated by the lack of process. The cost of us, economic and social, has been very high," he explained.

The President went on to note that debt restructuring process is a negotiation and it should by essence be interactive.

"Dealing with the Paris Club and the non-Paris Club, we need a new approach. This is basically geopolitical issue. The mistrust between the US and China, and the growing tensions, it has to be addressed by all, not merely by Sri Lanka or the country concerned. If you do not resolve it, in Asia and Africa we will get caught into another situation not of our making. These would be the major issue we have to address," he futher said.

Stressing that restructuring is needed, President Wickremesinghe said the process has to move fast.

"Otherwise most of the countries, whether LIC (low-income country) or MIC(middle-income country) will not have much hope. There will be more instability, political and economic instability. Without creating a separate process, we should deal with the issues of the Middle income countries, because most are under stress. It's better to deal with them when they are understess, rather than being bankrupt. That process has to evolve," noted President Wickremesinghe.