Paris Club creditor nations are proposing a 10-year moratorium on Sri Lankan debt and another 15 years of debt restructuring as a formula to resolve the Sri Lankan debt crisis. The Paris club is a group of officials from 22 countries who find sustainable solutions for challenges faced by debtor countries.
The Paris club has also called upon the Global north and south to take a similar haircut in restructuring of Sri Lankan debt. So far no official proposal has been made by Paris club to China or India.
Meanwhile, the island nation is yet to initiate any formal dialogue with China. The delay has reduced chances of making the December deadline for getting extended fund facility from IMF executive board. The next likely IMF meeting is possible only in March 2023. Given the delays, Sri Lanka will require bridge funding for the period upto the finalisation of IMF package.
Earlier this year, Sri Lanka had defaulted on its 51 billion dollar external debt in the midst of spiralling political and economic crisis. India has provided emergency aid to the tune of four billion dollars to the Island nation to tide over its economic crisis this year.