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HomeNewsJapan urges Sri Lanka to tackle debt crisis for economic stability

Japan urges Sri Lanka to tackle debt crisis for economic stability

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Japan’s foreign minister, Yoko Kamikawa, emphasizes Sri Lanka’s economic revival as vital for Indo-Pacific stability during recent talks with Sri Lankan officials.

Following discussions with Sri Lankan counterpart Ali Sabry and President Ranil Wickremesinghe, attention focused on the island’s reforms to combat its severe economic crisis.

Despite hopes of finalizing deals with foreign creditors by April, Sri Lanka, which defaulted on its $46 billion external debt in April 2022, has yet to secure final agreements. Kamikawa stresses the importance of reaching a debt restructuring agreement with all creditors, including China, the island’s largest bilateral lender.

Japan expresses readiness to support Sri Lanka’s development by swiftly resuming existing yen loan projects post-debt restructuring, recognizing Colombo’s economic recovery as pivotal for the region. Mariko Kaneko, Japanese foreign ministry spokeswoman, underscores the need for Sri Lanka to advance IMF-backed governance reforms, particularly in addressing corruption.

Concerns arise regarding China’s significant infrastructure projects in Sri Lanka and the wider region, with Tokyo asserting that these projects fail to meet international finance standards. Sri Lanka’s previous inability to repay a massive loan from China led to the transfer of a deep-sea port in Hambantota to a Chinese firm on a 99-year lease.

Facing acute shortages of food, fuel, and medicines in 2022 due to cash constraints, Sri Lanka has undertaken painful economic reforms aligned with the IMF bailout program. However, challenges persist, highlighting the urgency of swift and comprehensive debt restructuring to facilitate the country’s economic recovery.

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