No new yen loan from Japan until stalled project is completed successfully – Top story

Colombo, July 5 (Daily Mirror) – Fresh off the successful completion of a bilateral debt restructuring, Japan has taken a stance that any new yen loan to Sri Lanka will be considered contingent on the successful completion of projects put on hold due to the economic crisis and subsequent confidence boost, a top source said.

Foreign Minister Ali Sabry, who was in Japan on an official visit, discussed resuming all suspended projects. A top source said Japan was keen to resume these projects once the paperwork and other formalities were completed.

Amid the economic crisis, Japan has suspended 12 projects run by the Japan International Cooperation Agency (JICA), including the expansion of Bandaranaike International Airport.

However, Japan does not intend to start any new yen loan projects in Sri Lanka until it is certain that the implementation of the suspended projects will be successful.

Asked about the light rail transit (LRT) project that was cancelled by the Gotabaya Rajapaksa government, even leading to disagreements with Japan, the source said, “It is being considered as a new project. The old project was cancelled. It will not be revived. If the LRT project is considered, it will be a new project.”

Sri Lanka withdrew from $1.5 billion rail project in 2020

President Ranil Wickremesinghe has also expressed interest in launching a light rail project with Japanese support.

Bilateral creditors account for 28.5 percent of Sri Lanka’s current external debt of $37 billion, according to Treasury data from late March. China is the single largest bilateral lender, accounting for $4.66 billion, and Japan is second with $2.35 billion.