The first agreement with official creditors who promised debt relief to the cash-strapped country last year was inked by Sri Lanka and Japan on Friday to restructure $2.5 billion in debts. Under a comprehensive debt treatment plan, Japan said that it was making concessions on a loan of 369.45 billion yen ($2.5 billion), which the International Monetary Fund believes is crucial for Sri Lanka’s economic recovery.
“The stability and prosperity of the entire Indo-Pacific region depend on the development of Sri Lanka, which is situated at a strategic point in the Indian Ocean,” the Japanese foreign ministry stated.
Tokyo was credited by Colombo’s finance ministry as having a “pivotal role” in Sri Lanka’s debt restructuring. Its leadership, commitment, and positive involvement proved instrumental in helping Sri Lanka navigate the challenges of economic recovery,” according to a statement released by the ministry.
Last June, Sri Lanka declared that all of its bilateral lenders had agreed to postpone repayments until 2028. The agreement with Japan on Friday is the first with a South Asian country’s official creditor, after formal agreements were postponed owing to lengthy talks.
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