The plan is expected to be announced on Thursday by lenders including India, France, Japan, and others. China, the largest bilateral lender to Sri Lanka, will be invited.

The situation could serve as a model for resolving the debt issues of middle-income nations, which are made worse by higher interest rates in the United States and Europe.

Highlights of the Meeting

The inaugural event will feature senior representatives from India and France, including Japanese Finance Minister Shunichi Suzuki. It is anticipated that President Ranil Wickremesinghe of Sri Lanka will participate online.

The private sector and other international organizations, in addition to the International Monetary Fund, World Bank, and other international organizations, will participate in the debt restructuring discussions. The parties involved will coordinate the first meeting’s timing.

After the coronavirus pandemic virtually halted global travel, Sri Lanka’s main source of tourism revenue plummeted. In May, the nation defaulted due to its inability to repay infrastructure funds borrowed from China and other nations. In last year June, China held 52% of Sri Lanka’s bi-lateral debt. With 20%, Japan came in second place, followed by India with 12% and France with 3%.

A common framework to address emerging economies’ debt issues was introduced in 2020 by the Group of Twenty, which includes industrial and emerging-market nations. Under the direction of the IMF and other organizations, the framework permits partial debt forgiveness; however, only low-income nations are eligible.

Due to the pandemic and Russia’s invasion of Ukraine, today’s high prices are severely hurting emerging economies. At the end of 2021, emerging economies had $9 trillion in external debt, more than double the level ten years earlier, according to the World Bank.