Digging Deep

Visiting World Bank President James D Wolfensohn down played possibilities of writing off US$ 600 mn worth of interest payments due from Sri Lanka, but said the island nation should focus on getting grant assistance to rebuild the tsunami hit areas. “We are considering debt relief, about US$ 600 mn is due from Sri Lanka this year by way of interest on principle debt and so on, but the question of debt relief will be taken up when the Paris Club meets next week,” Wolfensohn told a news conference on Sat.

The seven leading industrial nations, or G-7, have agreed that debt repayments for tsunami-devastated countries should be frozen and will seek agreement from all creditors at the next Paris Club meeting on Wed.

According to the World Bank’s latest figures, Sri Lanka’s total external debt tops US$ 9.6 bn. But the country’s debt repayment costs works out to about US$ 653 mn, according to the World Development Movement (WDM), which campaigns for debt relief.

Besides about US$ 1 bn of pledges from private individuals, Wolfesnsohn said world governments led by Australia and Germany have pledged nearly US$ 4.0 bn at the Jakarta tsunami conference.

But he says Sri Lanka should push donors to up the grant component of their pledges.