After years of paralysis caused by economic collapse, Sri Lanka’s long road through debt restructuring is beginning to yield results, with Japan restoring funding to dozens of stalled development projects across the island.
The government has decided to revive 75 development projects funded by the Japan International Cooperation Agency that had remained suspended for nearly four years during Sri Lanka’s worst economic crisis. The Government Information Department has officially confirmed that the Japanese government has allocated Rs. 18 billion, equivalent to approximately 9.17 billion Japanese yen, to restart these long delayed initiatives.
The groundwork for the resumption of these JICA projects was laid through the difficult and politically sensitive debt restructuring programme undertaken by the previous administration. Following Sri Lanka’s sovereign debt default in April 2022, all bilateral creditors, including Japan, halted financial assistance, freezing several major national projects. Among those suspended was the Bandaranaike International Airport Terminal 2 project, seen as critical to long term tourism and aviation growth.
However, sustained negotiations with the International Monetary Fund and diplomatic engagement with Japan led to formal debt restructuring memorandums of understanding being signed in 2024. Building on that progress, the current government has now secured final Cabinet approval and funding clearance to reactivate the stalled projects.
Most of the renewed funding will be channelled through the Rural Infrastructure Development Project in Emerging Regions. Under this programme, 75 sub projects will be implemented across the Northern, Eastern, North Central and Uva provinces, directly targeting rural livelihoods, connectivity and basic services. In the Uva province alone, 18 JICA funded projects valued at Rs. 3 billion are scheduled for completion. These include 12 road development projects, two irrigation schemes and four drinking water projects. Contractors have already been instructed to resume work immediately at these sites.
The revival of JICA projects sends a powerful signal to the international community about Sri Lanka’s economic recovery and renewed fiscal discipline. Japan’s decision to re release funding, as one of Sri Lanka’s most important bilateral creditors, reflects growing international confidence in the country’s reform path and debt management framework. It also underscores the importance of continuity in internationally negotiated agreements, even amid changes in political leadership.
India’s role in stabilising the economy during the darkest phase of the crisis has also been widely acknowledged. At a time when Sri Lanka faced near collapse, India extended emergency financial assistance worth nearly US$ 4 billion, ensuring the flow of fuel, medicine and essential goods. This intervention helped stabilise markets and created the conditions necessary for securing an IMF agreement and initiating debt restructuring.
That early support proved decisive in encouraging other partners, including Japan, to re engage constructively with Sri Lanka. Today, the Rs. 18 billion JICA allocation stands as a tangible outcome of that diplomatic foundation, marking a cautious but meaningful step forward in Sri Lanka’s economic rebuilding journey.
