Japanese Foreign Minister Yoshimasa Hayashi reiterated Sri Lanka’s significance as a key partner in a Tokyo-led initiative aimed at fostering security and economic cooperation in the Indo-Pacific region. The initiative also aims to counter the growing assertiveness of China.
Strategic Importance of Sri Lanka
Minister Hayashi emphasized Sri Lanka’s strategic location in the Indian Ocean, which plays a pivotal role in achieving a free and open Indo-Pacific. His statement came after a meeting with his Sri Lankan counterpart, Ali Sabry, in Colombo, the capital city.
Japan’s Initiative and Support
The initiative, announced by Japanese Prime Minister Fumio Kishida in March, involves Japan’s assistance to emerging economies, support for maritime security, provision of coast guard patrol boats and equipment, and collaboration on various infrastructure projects.
Sri Lanka’s Economic Challenges
Sri Lanka faced an economic crisis last year when it became the first Asia-Pacific country since the late 1990s to default on its foreign debt. With $51 billion in foreign debt, the country has been grappling with financial challenges.
China’s Role in Sri Lanka’s Debt
While Japan remains Sri Lanka’s largest creditor, about 10% of its debt is held by China. The latter has provided significant loans for infrastructure development projects, such as sea ports, airports, and power plants, as part of its Belt and Road Initiative. In March, China agreed to offer a two-year moratorium on loan repayments to Sri Lanka.
Japan’s Support for Debt Restructuring
Minister Hayashi expressed expectations for further progress in Sri Lanka’s debt restructuring process. He welcomed Sri Lanka’s efforts under an agreement with the International Monetary Fund, which includes anti-corruption measures and transparency in policy-making.
Resumption of Investment Projects
Foreign Minister Sabry, along with Sri Lankan President Ranil Wickremesinghe, invited Japan to resume investment projects already in the pipeline. They also urged Japan to consider fresh investments in sectors like power generation, ports, highways, dedicated investment zones, and the green and digital economy.
History of Japan-Sri Lanka Relations
Over the years, Japan has been a significant donor to Sri Lanka, carrying out key projects under concessionary terms. However, relations between the two countries faced strain when Sri Lanka’s previous president, Gotabaya Rajapaksa, unilaterally scrapped a Japan-funded light railway project after his election in 2019. Sri Lanka’s Cabinet has already approved a proposal to restart the railway project.
Moving Forward Amid Economic Challenges
With Rajapaksa’s resignation in July 2022 amid public protests over the country’s economic crisis, Sri Lanka and Japan aim to strengthen their ties and collaboration in various sectors to address challenges and foster mutual growth and development.