A light rail project that was to be completed in Colombo with Japanese funding has been cancelled by the Sri Lankan government, as the country's international debt continues to increase.
The total cost of the Light Railway Track System was projected to be $1.5 billion, with Sri Lanka and the Japan International Cooperation Agency signing a concessionary loan agreement of about ¥30 billion early last year.
Gotabaya Rajapaksa has called off the project that was signed by the previous government, stating that it is not “cost-effective”. Mr Rajapaksa reportedly stated that the costs for constructing and operating the elevated track are largely excessive, with cabinet spokesman Keheliya Rambukwella claiming “We are thinking of a more efficient project that can achieve the same results but within $500 million". "It will be very successful,” he added.
The initial plan funded by the Japan International Cooperation Agency was to be built in order to avoid traffic congestion in Colombo, and initial construction had already gotten underway.
Whilst China has been strengthening its influence in the region through its ‘One Belt, One Road’ scheme, Japan is also seeking to gain economic influence on the island.
The government’s concern comes as Sri Lanka’s gross external debt exceeds $50 billion, and the recent Moody credit ratings for Sri Lanka saw a downgrade due to a significant decline in revenue and economic slowdown.