Sri Lanka To Be Backed By India-Japan To Boost the Nation’s Collapsing Economy

India and Japan are collaborating to help Sri Lanka achieve a sustainable growth trajectory. Valid media sources have pointed it out at a time when Sri Lanka is facing an overbearing situation that has caused a setback in the socio-economic conditions of the country with the increasing rates of unemployment, rising inflation, and poverty.

The report has stated an increase in the India-Japan collaboration with Sri Lanka to help the country to move out of the crises which the Chinese debt has caused.

The report has been presented in the presence of the Japanese ambassador Mizukoshi Hideaki and the Indian High commissioner Gopal Baglay in Colombo this week. 

The Indian high commissioner has responded to the occasion and shared wide interests of India and Japan in a peaceful, progressive, and prosperous Indo-Pacific region, and the Japan Prime Minister has recently visited India where he shared his opinion for a free and open Indo-Paific.

He has added that it could be a good opportunity for India, Japan, and Sri Lanka to work together for the well-being of its citizens and the benefit of the respective nations, considering that Sri Lanka is an integral member of the Indian Ocean Rim Association (IROA) nations.

Baglay has asserted that all the decisions will take place keeping the priorities of Sri Lanka intact. The Japanese ambassador has added that both nations had a positive impact on the region. 

On the Prime Minister’s recent visit to India, the two leaders talked about and negotiated to work closely, while addressing India’s neighboring Country’s debt issue. The Japanese ambassador has stated that connectivity could be the best area to demonstrate how the two countries are bringing tangible advantages to the entire region, including Sri Lanka. It is integral to learn about the perspectives of other nations and thus, a report is integral. 

Regarding the debt Issue, the IMF has granted the Extended Fund Facility to the collapsing country. Japan highly respects the decision because it could be a prominent initiative for the revitalization of the economy. Japan has even acknowledged India’s assurance to provide financial support to Sri Lanka. He has added that Japan and India would be able to contribute to reviving the collapsing economy with their expertise.

Sri Lanka has major benefits from India, in terms of regional economic power with an increasing market, and Japan could be a long-standing partner in Sri Lanka’s socio-economic development.

Japan has been Sri Lanka’s top donor and development partner for the last fifty years, but its assistance has received much lesser coverage than China.

Sri Lanka has been a part of China’s Belt and Road Initiative, a long-term plan to enhance linking among different regions of the world.

Sri Lanka receives funding from IMF: A Silver Lining 

The International Monetary Fund (IMF) has approved a $3 billion (£2.4 billion) bailout for Sri Lanka, which is facing its worst economic crisis since independence.

The agreement has been in the works for nearly a year and is a lifeline for the country, which has billions of dollars in loans.

According to Foreign Minister Ali Sabry, the government plans to raise funds by restructuring state-owned enterprises and privatizing the national airline.

Analysts, however, warn that Sri Lanka faces a difficult road ahead.

“The nation still faces a long road towards consolidation of its government balance sheet, consistent economic growth, and external stability,” said Andrew Wood, an analyst at S&P Global Ratings. We anticipate that the economy will contract again in 2023, albeit at a slower pace, before returning to growth in 2024.”

The IMF announced earlier this month that Sri Lanka had received financing assurances from all of its major creditors, including China and India, paving the way for the bailout.

Mr. Sabry said it was “a little premature” to speculate on whether China, the nation’s largest bilateral lender, would consider canceling some of the country’s debts.

edited and proofread by nikita sharma