India is working out a package on an urgent basis to assist Sri Lanka, following finance minister Basil Rajapaksa’s New Delhi visit that focussed on measures to tide over an economic crisis that the island nation is facing. The Economic Times of India said.
“The Sri Lankan finance minister’s discussions with his Indian counterpart and the external affairs minister focussed on a whole gamut of issues of mutual importance pertaining to the bilateral relationship with particular attention on the economic cooperation aspect.
Both sides expressed satisfaction over the evolving trajectory of the bilateral relationship. During the discussions, they identified ways and means through which the existing bilateral economic relationship between the two countries could be further broadened and deepened,” according to a Lankan government statement.
Rajapaksa briefed the Indian side of the economic situation in Sri Lanka and his government’s approach to addressing post-Covid challenges. This was the first overseas visit of finance minister Rajapaksa since he assumed office in July this year.
During the two-day visit, Rajapaksa had two rounds of joint discussions with Sitharaman and Jaishankar. He also met with the minister for petroleum & natural gas Hardeep Singh Puri and national security advisor Ajit Kumar Doval.
Lanka’s oil bill has jumped 41.5% to $2 billion in the first seven months of this year, compared with last year. The country is facing a severe foreign exchange crisis after the pandemic hit the nation’s earnings from tourism and remittances. Its gross domestic product has contracted by 3.6% in 2020 and its foreign exchange reserves plunged by over a half in one year through July to just $2.8 billion. This has led to a 9% depreciation of the Sri Lankan rupee against the dollar during the past year.
India is expected to extend a food & health security package to Sri Lanka on an urgent basis, along with an energy security package and currency swap, and also push Indian investments, officials told ET. It was agreed during Rajapaksa’s visit that the procedures to realise these objectives would be finalised early, within a mutually agreed time. The food and health security package would envisage the extension of a line of credit to cover the import of food, medicines and other essential ite ..
The energy package would also comprise a line of credit to cover import of fuel from India, and an early modernisation of Trincomalee Oil Tank Farm. There is also an offer of a currency swap to help Sri Lanka address its current balance of payment issues, the officials said.
