Japanese Deputy Ambassador Katsuki Kotaro noted that Paris Club members were in agreement and were to communicate their financing assurances in the next few days. He further added that they expect the country to unlock IMF financing by March 21. The country will also be able to get additional financing from multilateral lenders. Japanese investors have also shown interest in Listed State-Owned Enterprises.
Kotaro said, “Earlier this week the Paris Club, the group of developed countries discussing debt and development assistance collectively, said that we would assure financing assurance within days. These things hopefully will lead to the IMF having the board convene and approve this package.”
Kotaro was speaking on January 28 at an International Chamber of Commerce Sri Lanka webinar on ‘Funding Options for Sri Lanka.’
IMF arrangements will be an initial step to unlocking other financings. He noted that the money would come in ‘Spring’ (March 21). He noted that Sri Lanka with approval from the IMF will also unlock financing from other bilateral creditors.
He said, “Even if the IMF board approves it and unlocks the money, it will only unlock breathing space. The whole package is US$ 2.9 billion and the first tranche will only be part of that.”
Sri Lanka’s dollar solvency problem was exacerbated by notions of risk in the economy which prevented the country from rolling over debt obligations. Kotaro, concerning the IMF arrangement, said “It won’t be the cure.”
Japan has been able to grow into one of the most developed countries in the world following the second world war by having a very careful development strategy that was not antithetical to US interests.
Kotaro said, “Japan was burned down to ashes for making the wrong decision to enter a war.” Japan subsequently after being used as a test case for the efficacy of nuclear weapons organized itself to be less overtly against US interests. Japan grew by exporting items to the US and recycling its export proceeds into US treasury bills and multilateral institutions. Kotaro said, “We came back strongly in our economy.”
Kotaro noted that the divestment of state-owned publicly listed companies would be an easy mechanism to raise funds.
Kotaro said that in the interim period before the debt restructuring Sri Lanka was unable to secure new Japanese loans. He said, “Because Sri Lanka has defaulted, we cannot extend new loans. Taxpayers’ money can’t be put in without a guarantee of it coming back.”
Kotaro signalled Japanese willingness to undertake new large projects. He however noted the lack of national consensus when it came to the implementation of these projects. Kotaro called on the country to develop a national strategy with consensus across the spectrum of government institutions and political parties to create a framework that foreign lenders can interface with.
It is the task of Sri Lankan engineers to formulate a reasonable national policy concerning rail infrastructure with appropriate usage of Japanese, Indian, and Chinese technology without making these mutually exclusive options for the development of mass transit in the country. The development plan should be able to unlock financing from any multi-lateral lender regardless of geo-political bent.Japan has recently facilitated exams locally for the uptake of skilled labour jobs in Japan. Accordingly, jobs in caretaking, food service, and agriculture have been made accessible to the local labour market.
TP
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