Japan will resume funding for Sri Lanka’s stalled infrastructure projects, including the development of the main international airport. This decision comes after Sri Lanka successfully restructured its foreign debt following a financial crisis. Sri Lanka defaulted on $46 billion in international borrowings two years ago, during the economic crisis, prompting bilateral lenders like Japan to cease project funding.
Hideaki Mizukoshi, Japan’s ambassador to Sri Lanka, declared that Japan is the first country to restore finance for stalled projects.
According to a Sri Lankan finance ministry official, Japan will transfer a first tranche of approximately $75 million for 11 projects, including the development of Colombo International Airport. Japan’s overall credit portfolio in Sri Lanka is expected to be $2.3 billion, with another $1.1 billion set aside for ongoing projects over the next five years. The Japanese ambassador expressed satisfaction with Sri Lanka’s debt restructuring, stressing “comparability of treatment” for all creditors.
Japan is Sri Lanka’s second-largest bilateral creditor, after China.
Sri Lanka just reached a restructuring agreement with bilateral lenders to cover up to $10 billion in debt, which is critical for recovery following its 2022 financial catastrophe. The country’s financial collapse resulted in months of shortages and political unrest, prompting a $2.9 billion International Monetary Fund bailout package.
