Friend Or Foe?

Government creditors in the Paris Club are this week to consider a debt moratorium for Sri Lanka and Indonesia, two of the countries worst affected by last month’s tidal wave, although experts have questioned the usefulness to Jakarta of such a move. Government creditors in the Paris Club are this week to consider a debt moratorium for Sri Lanka and Indonesia, two of the countries worst affected by last month’s tidal wave, although experts have questioned the usefulness to Jakarta of such a move. While Asian and world leaders convening in Jakarta last Thursday backed a freeze on debt payments from tsunami-hit nations, only two of the 11 countries — Sri Lanka and Indonesia — have asked to have their financial situation reviewed by the Paris Club at a meeting here beginning Wednesday, according to Club sources.

Another source close to the Paris Club has said the meeting would debate a debt repayment freeze but not a cancellation.

A cancellation or restructuring, of which Britain is the main proponent, could come later “in a second phase,” the source said.

Suspending debt payments from countries affected by the December 26 disaster won the backing Friday of finance ministers from the Group of Seven industrialized countries.