Japan Prime Minister Kishida meets Sri Lanka president on debt repair talks

Japanese Prime Minister Fumio Kishida will meet Sri Lanka’s president on Thursday as the South Asian nation looks to bolster efforts to restructure its debt and repair an economy deeply scarred by a severe financial crisis.

Kishida’s meeting with President Ranil Wickremesinghe comes days after the International Monetary Fund (IMF) called for achieving timely restructuring agreements with the country’s creditors. The global lender said Sri Lanka’s macroeconomic situation was improving.

The meeting is unlikely to produce any new initiative but both sides would take stock of efforts on Sri Lanka’s debt restructuring, a Japanese official told Reuters.

Sri Lanka defaulted on its foreign debt for the first time in its history in April last year as its economy was crushed by its worst financial crisis since independence from Britain in 1948.

Last month, Japan, France and India unveiled a common platform for talks among bilateral creditors to co-ordinate restructuring of Sri Lanka’s debt.

China attended as an observer in the first meeting of the creditor nations earlier this month, offering some hope Beijing will deepen its engagement to resolve the debt woes of developing countries.

China, Sri Lanka’s largest bilateral lender, is seen as key to talks on the country’s debt restructuring efforts.

Sri Lanka owes $7.1 billion to its creditors, with $3 billion owed to China, $1.6 billion to India and $2.4 billion to the Paris Club, a group of creditor nations.

The island nation secured a $2.9 billion bailout from the IMF in March but must now have a debt restructuring framework in place by September to take the program forward, or risk further undermining its economy which is slowly beginning to recover.

(Reuters)