Sri Lanka debt deal shows creditors can set aside geopolitical rivalries for debt-distressed nations

Ram Manikkalingam in SCMP:

The International Monetary Fund approved a US$3 billion loan to Sri Lanka a month ago as the first step in restructuring its debt. This is a significant victory for Sri Lanka’s President Ranil Wickremesinghe and could lead to a gradual stabilisation of the economy and the government’s turnaround from bankruptcy.

After the “staff-level agreement” signed with the IMF six months ago, Sri Lanka’s debt restructuring has finally been approved by the IMF board. In this restructuring, China played a major role. As Sri Lanka’s (and the world’s) largest sovereign creditor, China joined Western governments and India in providing the assurances that unlocked the financing.

But is China’s role in Sri Lanka’s debt restructuring a one-off or a signal that China’s position on sovereign debt has shifted – something that could lead to a global policy breakthrough in negotiating debt restructuring?

More here.