Public Finance Data and Analysis
Free and Open Access to
Japan, as Sri Lanka's significant bilateral lender, emphasizes the pressing need for the island nation to accelerate its debt restructuring efforts. This urgency stems from the looming International Monetary Fund review and the importance of restoring confidence in the national economy for businesses and investors.
Japan expresses its intention to assist Sri Lanka even before the conclusion of the debt restructuring process. This is evidenced by the agreement to restart stalled bilateral projects, such as the Light Rail Transit, indicating a proactive approach to bolstering economic stability and confidence.
Japan, Sri Lanka’s largest bilateral lender following China, has emphasized the urgency for the island nation to expedite its debt restructuring efforts for its own benefit. Highlighting Sri Lanka's lagging progress in debt restructuring, Japan's Deputy Head of Mission Kotaro Katsuki stressed the importance of picking up momentum, especially with an imminent International Monetary Fund review. Katsuki underscored the necessity for Sri Lanka to conclude the process promptly, emphasizing its significance not only for the national economy but also for businesses and investors operating within the country. Speaking at a forum hosted by the Sri Lanka-Japan Business Council, he emphasized the critical role of timely restructuring in fostering economic stability and confidence.
Currently, efforts are underway to finalize a memorandum of understanding, though progress has been hindered by lingering technical issues. Despite the challenges, Katsuki expressed optimism that these issues could be resolved soon, bringing the restructuring efforts to a close. He noted that the conclusion of this process is eagerly awaited by multilateral lenders, whose support is contingent upon its completion. Furthermore, Japan has signaled its intention to aid Sri Lanka even before the finalization of the restructuring, as evidenced by the agreement to revive stalled bilateral projects, including the US $1.5 billion Light Rail Transit. This proactive approach, according to Katsuki, signifies a bold step forward and is expected to instill confidence in Sri Lanka's economic outlook. The resumption of projects financed by the Japan International Cooperation Agency (JICA) will not only contribute to the real economy but also address the challenges faced on the ground, despite significant improvements at the macroeconomic level.
