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Japan seeks Sri Lanka recovery for regional stability

COLOMBO (AFP) – Strategically placed Sri Lanka’s economic recovery was essential for stability in the Indo-Pacific region, Japan’s foreign minister said on Saturday, urging Colombo to swiftly restructure its foreign debt.

Yoko Kamikawa said Colombo should secure agreements with bilateral lenders and international sovereign bondholders to unlock suspended foreign funding for the cash-strapped nation.

After talks with her Sri Lankan counterpart Ali Sabry, Kamikawa called on President Ranil Wickremesinghe and discussed the island’s reforms to overcome its worst economic crisis, the two sides said.

“Deliberation also encompassed discussions on the signing of the Memorandum of Understanding (MoU) pertaining to debt restructuring in Sri Lanka,” Wickremesinghe’s office said in a statement.

The Sri Lankan government which defaulted on its USD46 billion external debt in April 2022 had hoped to finalise deals with foreign creditors by April but there have been no final agreements yet. Kamikawa told reporters that 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 debt restructuring),” she said. She said Tokyo considered Colombo’s economic recovery as 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 Indian Ocean, is essential for the stability and prosperity of the entire Indo-Pacific region,” she added.

Sri Lanka’s Foreign Minister Ali Sabry shakes hands with Japan’s foreign Minister Yoko Kamikawa after a joint press conference in Colombo, Sri Lanka. PHOTO: AFP