Sri Lanka said on Wednesday that cabinet approval has been given to finalise a debt restructuring deal with Japan, a move that follows a preliminary agreement reached last June with key bilateral lenders.
"After multiple rounds of negotiations, this is an important step for Sri Lanka to complete its debt restructuring process and emerge from a severe financial crisis. This is an important step for Sri Lanka to rebuild its economy," Cabinet spokesperson Nalinda Jayatissa told reporters.
Sri Lanka's economy crumpled under a severe foreign exchange crisis in 2022 but it has made a faster-than-expected recovery, aided by a $2.9 billion bailout from the International Monetary Fund.
The South Asian island nation owes $2.52 billion to Japan, government data shows.
It needs to sign similar agreements with China for about $4.75 billion and with India for $1.4 billion to successfully complete the fourth stage of the IMF programme after which a new tranche of $333 million will be released to the country.
China and Sri Lanka agreed on more investment and economic cooperation last month when Chinese President Xi Jinping met recently elected Sri Lankan President Anura Kumara Dissanayake in Beijing.
In addition to the preliminary $10 billion bilateral debt restructuring agreement with key lenders, Colombo secured a $12.5 billion bondholder deal in December.
