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JICA projects stalled amid debt default
View(s):All projects of the Japan International Cooperation Agency (JICA) have been suspended after the Sri Lanka Government’s debt default in April.
Ports, Shipping and Aviation Minister Nimal Siripala de Silva told Parliament this week 12 projects of Japan’s official overseas development arm were halted until the IMF established a roadmap on Sri Lanka’s debt and sustainability.
Sri Lanka has defaulted on JICA repayments since April, authoritative sources said. Loan conditions required the agency to suspend disbursements in the case of a default. When this happens, the Government must either pay contractors with its own funds or suspend or terminate projects.
For JICA to recommence disbursement of loan funds, the “default” status must be removed, the sources explained. “That can only be done by restructuring,” they said. “Restructuring can happen only in the Framework of an IMF agreement.”
Sri Lanka is desperate to rebuild relations with Japan, a longtime ally and bilateral donor, after the last administration cancelled several projects including the Light Rail Transit for which agreements had already been signed.
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