Sri Lanka's debt: Japan highlights collaboration with Colombo, praises India's role

(WION); As Sri Lanka emerges from the devastating economic crisis of last year, Japan's Ambassador to Delhi Hiroshi Suzuki underscored the robust collaboration between Tokyo and Colombo in navigating the intricate terrain of debt restructuring, while also commending the instrumental role played by India.

Speaking at the India-Sri Lanka-Japan Trilateral Cooperation Event, co-hosted by NatStrat, VIF, Pathfinder, and CII, Ambassador Suzuki articulated Japan's commitment to adhering to international rules and standards in the pursuit of debt restructuring.

He said, "For debt relief, Japan attaches importance to international rules and standards. We place highest priorities to transparent and equitable debt restructuring where all creditor countries, organisations and entities, the principle of equitable treatment should be applied among all creditors. "

He said that India's issuance of financing assurances in January significantly expedited Sri Lanka's debt restructuring.

Acknowledging New Delhi's proactive approach, Suzuki conveyed Japan's appreciation for India's pivotal role in the process saying, "Japan values India's positive and constructive role...we appreciate India's approach, the forward-looking approach on this issue.”

The collaboration between Japan and India intensified during Prime Minister Kishida's visit to India in March, where discussions with PM Modi focused on Sri Lanka's economic challenges and solidified the nations' close coordination in advancing the debt restructuring process.

Notably, the International Monetary Fund (IMF) extended a bailout package to Colombo in March, reinforcing the international community's commitment to Sri Lanka's financial recovery.

Subsequently, in April, a significant development occurred as Japan, India, and France joined forces to establish an official creditors club, jointly assuming the role of co-chairs. This triad of nations has emerged as the driving force behind Sri Lanka's debt restructuring journey.

The initial debt restructuring meeting in May marked a pivotal step and in July, Sri Lanka's domestic debt restructuring plan secured parliamentary approval, setting the stage for coordinated action on both domestic and international fronts.

While illustrating the Japanese government’s efforts and policy for debt relief in Sri Lanka, the ambassador said, "Japan's position is the principles are important, transparency and financial comparability, because if one country is favoured over another country, then entire debt restructuring is impacted."

Japan's Foreign Minister Yoshimasa Hayashi, during his visit to Sri Lanka in July, engaged in high-level discussions with President Ranil Wickremesinghe and Foreign Minister Ali Sabry, further reaffirming Japan's commitment to the nation's debt recovery cause.

Sri Lanka's debt restructuring represents a remarkable instance where the international community has rallied to aid a middle-income country in managing its debt predicament. Ambassador Suzuki expressed optimism, stating, "If we can fully solve this, we will make history by turning this challenge into a reality."