Japan stands by Sri Lanka in support of the debt restructuring negotiation process so that the South Asian nation can reach the final agreement with the International Monetary Fund (IMF), Japanese Ambassador to Sri Lanka Hideaki Mizukoshi said on Friday.
According to Reuters, Mizukoshi said Japan, one of Sri Lanka’s main creditors, intends to play a constructive role with other creditor countries, including China and India.
Japan holds around $3.5 billion of Sri Lanka’s total bilateral debt of about $10 billion, amounting to 4.4% of the island’s GDP, according to government and IMF data. Japan is also a major trading partner.
Although Japan will support the debt negotiation process, Mizukoshi said that talks on large infrastructure projects will only be resumed after Sri Lanka’s economy recovers.
“In the future, when this economic crisis is over and the economic conditions are in good shape, we can restart that kind of discussions,” he said.
In 2020, Sri Lanka suspended a $1.5 billion Japanese-funded light rail project for the commercial capital Colombo, citing financial problems.
Sri Lanka is seeking to restructure about $30 billion of its foreign debt and find a way out of a crippling economic crisis.
Reaching an agreement with creditors is key to Sri Lanka securing a $2.9 billion bailout package from the IMF. (NewsWire)