Japan urges Sri Lanka to restructure debt swiftly

4 May 2024 07:28 pm - 21 - {{hitsCtrl.values.hits}}

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Colombo, May 4 (The Japan Times) - Strategically placed Sri Lanka's economic recovery is essential for stability in the Indo-Pacific region, Japanese Foreign Minister Yoko Kamikawa said Saturday, urging Colombo to swiftly restructure its foreign debt.

After talks with her Sri Lankan counterpart, Ali Sabry, Kamikawa said that Colombo should secure agreements with bilateral lenders and international sovereign bondholders to unlock suspended foreign funding.

The Sri Lankan government which defaulted on its $46 billion external debt in April 2022, had hoped to finalize deals with foreign creditors by April but there have been no final agreements yet.

Kamikawa said she "stressed the importance of reaching a debt restructuring agreement with all the creditors," including China — the largest bilateral lender to the island.

"I also conveyed Japan's intention to further support Sri Lanka's development by swiftly resuming existing yen loan projects (after a debt restructuring deal)," she said.

She said Tokyo considered Colombo's economic recovery to be crucial for the entire region. The island is located halfway along the main east-west international shipping route.

"The restoration of stability and economic development of Sri Lanka, which is at a strategic location in the India Ocean, is essential for the stability and prosperity of the entire Indo-Pacific region," she added.

Sri Lanka must secure agreement from all official creditors and a majority of private bondholders to continue with a four-year, $2.9 billion bailout loan that began in March last year.

Japan, the second largest bilateral lender to the island, has expressed concern about China's big infrastructure projects in Sri Lanka and elsewhere in the region.

Tokyo maintains that the Chinese-funded projects did not meet international finance standards.

Unable to repay a huge loan taken from China in 2017 to build a deep sea port in southern Hambantota, Sri Lanka handed it over to a Chinese firm for $1.12 billion on a 99-year lease.

Sri Lanka ran out of cash to pay for even the most essential imports in 2022, leading to chronic shortages of food, fuel and medicines.

Then-President Gotabaya Rajapaksa, who faced allegations of mismanagement and corruption, was forced to flee the country and resign in July 2022 after months of protests.

His successor, Ranil Wickremesinghe, has raised taxes, cut subsidies and is enforcing painful economic reforms in line with the IMF bailout.

Also Saturday, the two countries agreed to work to resume stalled bilateral projects, including a $1.5 billion Japanese-funded light railway. Sri Lanka pulled out of the rail project in 2020, when it was moving closer to China under Rajapaksa.

Comments - 21

Genuine Finance Minister Will Save The Day Saturday, 04 May 2024 08:37 PM

Finance minister will cook up a deal soon so that he retains his post. He’s good at updating positive updates on the rupee and always saying alls looking good with economy. That’s why he updated recently should be possible to start importing vehicles again soon.

Patcitz Saturday, 04 May 2024 11:26 PM

If Japan is really interested in relieving Sri Lanka's DEBT burden, they must come forward, coupled with other interested couterparts to repay IMF

Dirty Sunday, 05 May 2024 12:33 AM

Corruption still persists in the country. The news VISA DEAL with VFS is the latest.

FairJudge Sunday, 05 May 2024 12:35 AM

Why should Japan pay corrupt SL's debt? SL dug its own grave via mismanagement, corruption, political thuggery, inefficiency and basically it is a basket case. How Japan does things compated to SL is like sky and earth. SL will be a perennial developing country for another thousand years.

Control Expenditures and Manage Debts Sunday, 05 May 2024 02:43 AM

They will go Bankrupt themselves by getting involved with SL’s debts. Their economy like most countries, aren’t doing well either. The Yen value has dropped to its lowest this year since the 90s. Most countries are managing within their means. Unlike SL, having high expenses with Huge government staffing, Politicians, Tri-Forces with perks and high salaries etc are just borrowing and begging from financial institutions to maintain a fairy tale lifestyle.

Jude Sunday, 05 May 2024 12:08 AM

Hello, restructuring the debt is full-time job of SL government, yeah.

Jude Sunday, 05 May 2024 12:10 AM

Lankan finance minister and State finance ministers have PhD in debt restructuring, yeah.

Buddhist Sunday, 05 May 2024 02:59 AM

Ranil has once again failed in his duty to restructure the debt. Has Ranil delivered anything to date other than the debt increase since he became the President?

SL Sunday, 05 May 2024 03:18 AM

Among the select nations that have extended their support without seizing control of profitable entities in Sri Lanka, they've truly assisted other nations without any ulterior motives. Regrettably, politicians like RW have steered our country towards a dependence on begging.

Jude Sunday, 05 May 2024 04:11 AM

What SL government do best at the moment is restructuring Debt. Yeah, it's make life easier to NOT to repay Debt!! HUH!!

FredSnR Sunday, 05 May 2024 04:52 AM

Need a Can Do attitude Too much negative sentiment and pessimism coming in the way currently. The change has to come from the Top to be sustainable The Japanese are hard working ,good team players, innovative, many things we can learn from them without borrowing money, to solve Sri Lankas problems.Need home grown solutions Sri Lankan people are intelligent, literate, survivors, just need that switch to come together as a nation despite personal differences need that team spirit ,that focus, that will to win, like in a cricket game which all Sri Lankans go to watch, together

Kevin Sunday, 05 May 2024 05:42 AM

Japanese loans including loans from ADB (owned by the Japanese government) are the second largest chunk of loans after ISBs. How about debt forgiveness Japan?

S.K Kumara Sunday, 05 May 2024 07:02 AM

Japanese government has to be extremely cautious when dealing with a known group of tropical shysters. When the Sri Lankan's cook the books for the Japanese they'd season the meals with Ajinomoto !!

Punchi Sunday, 05 May 2024 08:01 AM

The worldwide good vibes generated by our 2500 year civilisation and Buddhist culture is responsible for peace and harmony in the world. Other countries should be grateful and pay us alms. To begin with they can pay off any overseas loans, that is if our most prosperous country really has any overseas loans

Ron Sunday, 05 May 2024 10:59 AM

IMF Loans have increased high taxes incresed poverty starvation sky rocketed cost of living is it fair...mojority population in the country is middle-class and poor families our foriegn partners must take responsibility to provide effortability proper Reforms whitout the suffering of our people who are well below the average who been effected due to debts before the imf loans cost of living was reasonable majority poor middle-class had food on the table today with sky rocketed taxes people are in huge difficulty restructuring debts whitout punishing the majority would be a key factor untill debts been paid timely manner

Cheers Sunday, 05 May 2024 11:35 AM

Hey Japan is in total dissary, polticaly and financially and you are in a major recession and USA is now forcing you to join Aukus why you are financially dreadful your advice is on other countries are not required as you have a big problem in your own den

FredSnR Sunday, 05 May 2024 04:33 PM

Very high domestic debt but has foreign reserves second only to China you could check thanks

To manage the economy Sunday, 05 May 2024 07:24 PM

Sri Lanka must have atleast a 10 year moratorium on debt or interest repayment. Also no interest accrued during this pariod.

FredSnR Monday, 06 May 2024 04:24 AM

And Sri Lanka must live within its means otherwise no amount of moratoriums will save it. Snould run the country like a housewife operates her household budget, till you get out of this mess, otherwise you will have to sell the family home, in this case our assets to survive, which is what is happening.Without assets will be beggars forever

Interest Payments Paramount from Loans Monday, 06 May 2024 05:52 AM

Who in right mind will provide a loan with no interest? Will you do it yourself. Might be lucky to squeeze a discount for a few years. Everyone needs to make a quick $ and the international loan agencies are run to make money.

wsw Monday, 06 May 2024 09:41 AM

Good suggestion. However, who ever elected next, will continue to accumulate more debts and pilfer what ever they could their hands on, eventually burdening the people further. The vicious cycle will continue for a long time.

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Japan urges Sri Lanka to restructure debt swiftly

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