In a decisive shift in bilateral engagement, the Government of Japan has resumed major development projects in Sri Lanka that had been stalled for years due to concerns over mismanagement, lack of transparency and institutionalised corruption. This landmark decision is being hailed as a powerful endorsement of President Anura Kumara Dissanayake’s administration and its sweeping anti-corruption agenda.
The move signifies not just a resumption of funding but a diplomatic vote of confidence in Sri Lanka’s political will to restore good governance, fiscal accountability, and rule of law principles that underpin Japanese development cooperation.
Japan which has long been one of Sri Lanka’s most prominent, consistent development partner and Sri Lanka’s second-largest bilateral creditor, had grown increasingly cautious about disbursing funds under the previous administrations due to pervasive corruption and politicised public institutions.
Key projects including the Light Rail Transit system in Colombo, the expansion of the Bandaranaike International Airport and a variety of water, sanitation and transport infrastructure initiatives were either suspended or cancelled. These incidents involving corruption have had a severely negative impact on Sri Lanka’s economy and its ability to attract and sustain foreign investment. Japan, by tradition and policy, strongly opposes all forms of bribery and corruption and expects the same standards from its international partners.
That stance has now changed under President Dissanayake. In a high-level meeting with the Japanese Ambassador to Sri Lanka, the new President was commended for his Government’s zero-tolerance stance on corruption, institutional discipline and commitment to democratic accountability.
However, the Ambassador also announced the resumption of 11 stalled projects funded by the Japanese Government, including the Kandy City Water Management Project and Phase II of the Bandaranaike International Airport Development Project.
Strong oversight and clean governance
The Japanese Government, through the Japan International Cooperation Agency (JICA), has agreed to reinitiate 11 high-impact projects, which will inject over US $ 1.1 billion into the Sri Lankan economy over the next five years. These include:
A New Bridge Construction Project over the Kelani River -aimed at easing traffic congestion in and out of Colombo. This project is designed to improve urban mobility, facilitate trade, and reduce transport time and costs. Once completed, the bridge is expected to enhance regional connectivity and significantly improve logistical efficiency.
The Digitalisation of Terrestrial Television Broadcasting (DTTB) Project – SL-P112 – This project supports Sri Lanka’s transition from analogue to digital broadcasting, aiming to improve the quality and coverage of public television while freeing up valuable frequencies for future telecom development. It is also expected to modernise the country’s media landscape and strengthen disaster communication capabilities.
Anuradhapura North Water Supply Project – Phase I and II – With the goal of ensuring safe drinking water for thousands of residents in the dry zone, this project addresses chronic water shortages in the Anuradhapura District. The initiative supports improved public health, agricultural resilience, and poverty alleviation through better access to clean water.
The Kandy City Wastewater Management Project – A cornerstone of environmental protection and urban health, this project improves sanitation facilities, reduces pollution in water bodies, and promotes eco-friendly urban planning in one of Sri Lanka’s most culturally significant cities.
The National Transmission and Distribution Network Development and Efficiency Improvement Project – This initiative seeks to modernise Sri Lanka’s power grid, reduce electricity loss, and increase energy efficiency. The project directly supports the country’s clean energy targets and is vital for future industrial growth.
The Rural Infrastructure Development Project in Emerging Regions – Targeted at underdeveloped rural areas, this project improves roads, bridges, irrigation systems, and community facilities. It is designed to stimulate local economies, create jobs, and reduce regional disparities.
The Bandaranaike International Airport Development Project – With the aim of transforming BIA into a modern aviation hub, this project includes expanding terminals, improving safety systems, and enhancing passenger experience. The upgrade is expected to boost tourism, international trade, and economic competitiveness.
Kalu Ganga Water Supply Expansion Project – Phase I (SL-P117) – This project expands clean water access in Kalutara and surrounding areas, addressing the growing demand for safe and sustainable water supply in the Western Province.
The Health and Medical Service Improvement Project – Aimed at strengthening hospital infrastructure and healthcare delivery, this initiative supports the modernisation of facilities, procurement of medical equipment, and training of health professionals. It plays a key role in expanding access to quality healthcare across the island.
Each of these projects was previously delayed due to concerns around tender irregularities, political interference, and weak governance structures. President Dissanayake’s administration has committed to ensuring that every cent of foreign assistance is used for its intended public benefit with new oversight mechanisms to prevent leakages and enforce accountability.
The recommencement of these projects marks a new chapter in the longstanding partnership between Japan and Sri Lanka. It is also seen as a direct endorsement of President Dissanayake’s pledge to restore public trust through clean governance and institutional reform.
Government officials have indicated that streamlined oversight mechanisms are now in place to ensure these projects are delivered efficiently, on schedule, and with full transparency.
As Sri Lanka strives to rebuild its economy and public institutions, the support of international partners such as Japan combined with strong domestic leadership is expected to play a transformative role in the country’s development trajectory.
The broader context
This recommencement of development assistance comes at a pivotal time. Sri Lanka is still recovering from its worst economic crisis since Independence marked by a sovereign default in April 2022, severe shortages of fuel and medicine, and a near-collapse of public trust in governance. International creditors, including Japan, were forced to pause most funding until there was clarity on the country’s debt sustainability and governance reforms.
The political narrative has shifted dramatically under President Disanayake. From day one, the administration emphasized rebuilding State institutions, upholding meritocracy in public service appointments and addressing systemic corruption. This has sent a strong signal to both domestic and international stakeholders that Sri Lanka is serious about charting a new course.
In response, Japan has gone beyond recommencing projects. It has also committed new technical and policy support to Sri Lanka’s governance reforms, including a major grant which amounts to approximately USD 900,000 to the United Nations Development Programme (UNDP) in February 2024. This grant is funding a comprehensive anti-corruption project.
Rebuilding credibility
This renewed partnership with Japan is not just about roads, airports, or water systems, it is about rebuilding Sri Lanka’s credibility on the world stage. President Dissanayake’s emphasis on integrity, fiscal responsibility and service delivery has already begun to restore international trust. Development partners, multilateral lenders, and foreign investors are now reassessing Sri Lanka as a viable and responsible actor in the global economy.
“Development is not just about infrastructure it’s about institutions,” President Disanayake told the meeting with Japanese officials. “We are committed to ensuring that every project funded by our international partners benefits the people directly, with full transparency.”
Unlike many other donors, Japan has a unique approach to development aid anchored in quality, accountability and long-term sustainability. Japanese companies operating in Sri Lanka, including those contracted under JICA projects, are known for their high ethical standards and do not engage in bribery or political patronage. This has made their aid programs both respected and effective.
However, Japan’s development model also requires recipients to uphold rigorous governance standards. This was a key reason many projects were suspended under former Governments. With new leadership and renewed discipline in place, Japan’s re-engagement reflects a rare alignment of mutual trust and shared values.
A new chapter in bilateral relations
Japan’s decision to resume development projects is more than just an economic boost. It is a symbol of confidence in a new political era for Sri Lanka. It confirms that good governance yields real dividends not just in improved public services, but also in restoring the confidence of global partners.
The recommencement of these projects also sets the stage for expanded trade, investment and diplomatic collaboration in the years ahead. Sri Lanka’s future now depends not just on economic management, but on the strength and honesty of its institutions. With this renewed partnership, the foundations are being laid not just in concrete and steel, but in trust.
Japan’s decision to restart funding for previously suspended projects in Sri Lanka, along with its proactive backing of anti-corruption reforms, represents a crucial turning point in Sri Lanka’s path to recovery and sustainable development. This revitalised collaboration not only facilitates essential infrastructure improvements but also fortifies governance frameworks, laying a foundation for future economic resilience.
As Sri Lanka rebuilds from the depths of crisis, the collaboration with Japan exemplifies how international cooperation, aligned with domestic reforms, can foster progress and prosperity. The coming years will be crucial as these initiatives take shape and impact the lives of millions of Sri Lankans.
