Public Debt in Japan and Its Implications for Sri Lanka | JICA Chair Programme 2024/25 Lecture III
The third lecture in the JICA Chair Programme series took place on September 25, 2024, at Senate Hall, College House. The session commenced at 10:00 a.m. with a welcome address by Professor Chaminda Pathmakumara, Head of the Department of International Relations, Faculty of Arts. This was followed by an address by Mr Yamada Tetsuya, the Chief Representative of JICA Sri Lanka, highlighting the ongoing collaboration between JICA and the University of Colombo. The lecture was moderated by Senior Professor (Chair) H D Karunaratne, Vice Chancellor of the University.
Professor Someya Masakazu from the Graduate School of International Development, Nagoya University, Japan, delivered a comprehensive lecture on Public Debt in Japan and Its Implications for Sri Lanka. He discussed the benefits of Japan’s Government Bond Market (GBM) and its relevance to developing economies like Sri Lanka. He spoke about domestic Funding through Bonds and how Japan’s GBM offers a domestic alternative for fiscal deficits, reducing reliance on foreign borrowing and exchange rate risks. This system strengthens financial stability by allowing governments to manage debt efficiently. Further, he touched on Monetary Policy and Economic Growth. The GBM facilitates market-based monetary policy, enabling the Central Bank to use open market operations to stabilize bond prices and interest rates, which in turn affects investment and GDP growth.
He also shared about Risk Management and Cost Efficiency. By developing a bond market, Japan has reduced its debt-servicing costs while providing risk management tools for interest rates and currency fluctuations. This serves as an effective model for countries like Sri Lanka looking to develop similar systems. Lastly, he spoke on the long-term investment benefits. The GBM supports long-term investors such as life insurance and pension funds, contributing to financial security and social protection.
The lecture emphasized that Sri Lanka could learn from Japan’s experience, particularly in developing a stable and diversified investor base for its debt market, which could reduce refinancing risks and stimulate economic growth. The event concluded with an engaging Q&A session, followed by a vote of thanks from Dr Iroja Caldera, Director of the International Office.
