Japanese Prime Minister Kishida meets with Sri Lankan President on debt reform talks via Reuters

© Reuters. From file: Japanese Prime Minister Fumio Kishida attends a bilateral meeting convened by United Nations Secretary-General Antonio Guterres (not pictured) on the sidelines of the G7 leaders’ summit in Hiroshima, western Japan, on May 21, 2023. REUTERS/Androniki Christodoulou

TOKYO (Reuters) – Japanese Prime Minister Fumio Kishida will meet Sri Lanka’s president on Thursday as the South Asian nation looks to step up efforts to restructure its debt and repair an economy hit hard by a severe financial crisis.

Kishida’s meeting with President Ranil Wickremesinghe comes days after the International Monetary Fund called for timely restructuring agreements with the country’s creditors. The World Bank said the macroeconomic situation in Sri Lanka was improving.

A Japanese official told Reuters that the meeting is unlikely to result in any new initiative, but that the two sides will evaluate efforts on restructuring Sri Lanka’s debt.

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

Last month, Japan, France and India unveiled a joint platform for talks between bilateral creditors to coordinate Sri Lanka’s debt restructuring.

China attended as an observer the first meeting of creditor countries earlier this month, giving some hope that Beijing will deepen its involvement to solve developing countries’ debt problems.

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

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

The island nation received a $2.9 billion bailout from the International Monetary Fund in March, but must now have a debt restructuring framework in place by September to move the program forward, or risk undermining its slowly recovering economy.

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