Paris Club creditor nations are reportedly proposing a 10-year moratorium on Sri Lankan debt.
A report published by India’s Hindustan Times said in addition to the debt moratorium, the Paris Club has proposed another 15 years of debt restructuring as a formula to resolve the current financial crisis in Sri Lanka.
According to the report, the Paris Club has hinted that global south should also take a hair cut similar to the global north notwithstanding the inequitable distribution of wealth.
The proposal will impact both India and China with Sri Lanka currently in the process of hold discussions to restructure its external debt.
Sri Lanka has already reached a staff-level agreement with the International Monetary Fund but will be required to obtain debt assurances from countries like China and India to secure the bailout package.
The Paris Club has already indicated that it is prepared to restructure Sri Lanka’s debt.