Politics Of Sri Lanka’s IMF Bailout: An Initial Assessment – OpEd
Eurasia ReviewMar 27, 2023
Japan, India, and France on Thursday announced a common platform for bilateral creditors to coordinate restructuring Sri Lanka's debt. The three nations hope the move will be a template for restructuring other middle-income economies in the future.
China, Sri Lanka's biggest bilateral creditor, has notably not decided on whether it will join the common platform, which was unveiled in Washington amid International Monetary Fund (IMF) and World Bank meetings.
Western states and banks must coordinate Sri Lanka's bailout if they know what's good for them. Not only will it prevent Sri Lanka from tilting closer to China, but it will help ordinary Sri Lankans as they face complete economic collapse and record costs of living. Setting Sri Lanka on a path of stability will also help it regain its political institutions, as the South Asian nation hasn't been able to afford to hold elections without financial support.
Sri Lanka has been in a debt trap — one of the primary reasons for its recent economic collapse — but it isn't China that owns them. As of 2021, 81% of Sri Lanka's debt was held by European or US financial institutions, such as BlackRock, UBS, JP Morgan, and HSBC. The West has crushed the South Asian island nation through overwhelming debt for years, and now they're taking on yet another billion-dollar deal to further burden the Sri Lankan people.