Japan to organize Sri Lanka creditors’ meeting over debt

Japan is working to organize a meeting of Sri Lanka’s creditors by the end of this year in hopes of solving that country’s debt crisis, e Yomiuri Shimbun has learned. e meeting, which will discuss such issues as nding ways to reduce debt payments, aims to curb China’s in uence by helping Sri Lanka cope with its so-called debt traps, which arose a er China provided huge loans to the country to fund infrastructure developments and other projects.

Sri Lankan President Ranil Wickremesinghe asked Japan for help during talks with Prime Minister Fumio Kishida and other people during a visit to Japan

at the end of September to attend the state funeral of former Prime Minister Shinzo Abe, according to Japanese government sources.

The meeting is expected to focus on measures to reduce debt payments and postpone repayment deadlines, among other related steps. Japan continues to urge other creditor countries to play a proactive role in dealing with the issue.

Sri Lanka’s economy has su ered due to sluggish tourism during the novel coronavirus pandemic and soaring food and resource prices following Russia’s invasion of Ukraine. In April, the Sri Lankan government introduced an emergency measure to suspend its repayment of external debts.

According to the Sri Lankan government, the nation’s external debt at the end of June stood at $46.6 billion (¥6.93 trillion), accounting for about 70% of its gross domestic product.

Sri Lanka has more than 20 creditors, with China topping the list at $7.3 billion (about ¥1.086 trillion), followed by Japan at $2.7 billion (about ¥402 billion) and India at $1.7 billion (about ¥253 billion).

While struggling to repay its debts, Sri Lanka in 2017 e ectively transferred to China the operating rights of one of its ports.

China — which has come under criticism from the international community for causing Sri Lanka’s economic collapse — will not play a leading role in restructuring Sri Lanka’s debts, and the Japanese government will have to tread carefully in its e orts to reach an agreement among creditors in a manner acceptable to Beijing. (Oct. 18)