Japan Resumes Yen Loan Projects to Help Sri Lanka's Economic Recovery

Japan has announced the resumption of its Yen Loan Projects in Sri Lanka, halted since 2022. This decision follows Sri Lanka's successful external debt restructuring. Japan's renewed funding aims to support Sri Lanka's infrastructural development and economic stability, emphasizing the country's strategic importance in the Indo-Pacific region.

Japan has officially decided to resume funding its Yen Loan Projects in Sri Lanka, which had been paused since the island nation declared bankruptcy in 2022. This move follows the successful conclusion of Sri Lanka's external debt restructuring efforts last month.

According to a statement by the Japanese embassy, the decision came after the signing of a memorandum of understanding between Sri Lanka and its official creditor committee on 23 July. The Sri Lankan government expressed its willingness to swiftly conclude bilateral agreements on debt restructuring.

In April 2022, Japan suspended the disbursement of yen loans and other operations for 11 ongoing projects following Sri Lanka's temporary suspension of external debt payments amid an economic crisis. This debt restructuring was essential for the ongoing IMF program aimed at reviving Sri Lanka's bankrupted economy.

Japanese Ambassador Mizukoshi Hideaki praised Sri Lanka's economic reforms geared towards sustainability. He emphasized that the resumed Yen Loan Projects are critical infrastructures for Sri Lanka's economic growth and affirmed Japan's unwavering commitment to supporting the country.

The Japanese Foreign Ministry highlighted the strategic importance of Sri Lanka in the Indian Ocean, emphasizing that Japan will continue contributing to the country's sustainable development and growth through these resumed projects.

Key projects to be resumed include the terminal expansion at Colombo International Airport, the development of the Eastern container terminal at Colombo port, and a digital broadcasting project.