COLOMBO — Japan, one of Sri Lanka’s main creditors, will back the South Asian nation as it seeks to negotiate debt restructuring, Tokyo’s envoy to the country said on Friday.
Reaching an agreement with creditors is key to Sri Lanka securing a $2.9 billion bailout package from the International Monetary Fund (IMF).
“Japan stands by Sri Lanka in support of the debt restructuring negotiation process so that Sri Lanka can reach the final agreement with the IMF,” Ambassador Hideaki Mizukoshi told Reuters.
“Japan 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.
Sri Lanka is facing its worst economic crisis in decades, with severely depleted foreign exchanges reserves leading to prolonged shortages of essentials, including fuel and food. (Reporting by Uditha Jayasinghe, Writing by Devjyot Ghoshal)