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After Months of Delay, China Finally Begins Debt Restructuring Talks With Sri Lanka

Brad Setser is a former U.S. Treasury Department official who is now a senior fellow at the Council on Foreign Relations.

Sri Lankan President Ranil Wickremesinghe informed the country’s parliament late last week that China had finally agreed to begin long-desired debt restructuring talks. During a recent visit to Tokyo, President Wickremesinghe also called on Japan, Sri Lanka’s other main creditor in addition to China and India, to co-chair a creditors’ committee as part of an effort to finalize debt restructuring with all of its creditors by mid-2023.

But it’s not going to be easy, given that none of Sri Lanka’s major Asian bilateral creditors appears to be prioritizing debt relief. Brad Setser, a prominent U.S. scholar on debt issues who is also a former U.S. Treasury Department official and now a senior fellow at the Council on Foreign Relations, reflected on the challenge Colombo faces in a multi-part Twitter thread:

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