She urged Colombo to quickly restructure its $46 billion foreign debt by securing agreements with bilateral lenders and international sovereign bondholders.

The Sri Lankan government, which defaulted in April 2022, had aimed to finalize deals by April but no agreements have been reached yet.

Kamikawa emphasized the need for a debt restructuring agreement with all creditors, including China, and expressed Japan's intention to continue supporting Sri Lanka's development by resuming existing yen loan projects after a deal is reached.

A Japanese official emphasized the importance of Sri Lanka's economic recovery due to its location in the India Ocean, which is halfway along the main east-west international shipping route.

She stated that the stability and prosperity of the Indo-Pacific region depend on Sri Lanka's economic development.

The country needs to secure approval from all official creditors and a majority of private bondholders to continue with a $2.9 billion bailout loan.

Japan, as the second largest bilateral lender to Sri Lanka, has expressed concerns about China's infrastructure projects in the region, which allegedly do not meet international finance standards.

In 2017, Sri Lanka took a large loan from China to build a deep sea port in Hambantota.

Due to financial difficulties, Sri Lanka was unable to repay the loan and handed the port over to a Chinese firm for $1.12 billion on a 99-year lease in 2022.

The country ran out of cash for essential imports, leading to shortages of food, fuel, and medicines.

Former President Gotabaya Rajapaksa, who faced allegations of mismanagement and corruption, resigned in July 2022 after months of protests.

His successor, Ranil Wickremesinghe, implemented tax increases, subsidy cuts, and economic reforms as part of an IMF bailout to address the country's financial crisis.