India supports Sri Lanka’s economic recovery- S Jaishankar

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Sri Lanka (Commonwealth Union)_Indian External Affairs Minister S Jaishankar arrived in Sri Lanka on an official trip and met with the country’s senior leadership. During the official meeting, he reiterated India’s willingness to encourage investment flows to expedite the island nation’s economic recovery. Following the meeting with his Sri Lankan counterpart Ali Sabry shortly after his visit to Colombo, he tweeted, “Look forward to my discussions with the leadership tomorrow morning”. Further, as a demonstration of its sustained support for Sri Lanka’s economic recovery, India has sent the International Monetary Fund a letter of support for Sri Lanka’s funding and debt restructuring.

According to Mr. Jaishankar, India informed the IMF of its promise which the global lender needs from creditors in order to provide a desperately needed bailout to the cash-strapped island country. Sri Lanka, which is attempting to obtain a $2.9 billion bridging loan from the International Monetary Fund (IMF), was seeking to obtain financial assurances from its key creditors, China, Japan, and India, a requirement for Colombo to receive the bailout package. The IMF bailout has been paused as Sri Lanka engages in discussions with creditors to satisfy the global agency’s conditions for the loan.

Following his discussions, notably with President Ranil Wickremesinghe, Mr. Jaishankar tweeted, “Conveyed our commitment to increase investment flows to Sri Lanka to hasten its economic recovery”. Mr. Jaishankar, who visited Colombo from the Maldives as the second part of his two-nation visit, met with Sabry and addressed mutual and regional concerns. According to his tweet, “A good meeting with Foreign Minister Ali Sabry and other ministerial colleagues this evening in Colombo. Discussed India-Sri Lanka cooperation in infrastructure, connectivity, energy, industry, and health”.

A working dinner was arranged by President Wickremesinghe for the ministry. Sri Lanka’s extreme economic crisis has ironically enhanced India’s worry for its southern neighbor, considering the island states’ close economic relationship with China prior to the crisis. When the economic crisis began to bite a year ago, India provided $4 billion worth of help. President Wickremesinghe informed Parliament that his administration had successfully concluded debt restructuring discussions with India.

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Moreover, Rajat Kumar Mishra, India’s Additional Secretary of the Ministry of Finance, notified IMF head Kristalina Georgiva that New Delhi has reiterated its support for Sri Lanka’s debt restructuring. Further, Sri Lanka also concluded its debt restructuring discussions with Japan last week. As required by its agreement with the IMF for a $2.9 billion facility over four years, Sri Lanka commenced debt restructuring negotiations with its creditors in September 2022. It initiated negotiations with the IMF for a bailout in April of last year following the announcement of its first-ever sovereign debt default.

The IMF facility would allow the island government to seek bridge financing from markets and other lending institutions, including the ADB and the World Bank. Mr. Jaishankar was the first foreign delegate to visit Sri Lanka in the midst of the economic crisis. His visit in March of last year, during the peak of the crisis, reassured Sri Lankans that India’s Neighborhood First policy was in effect. According to the Ministry of External Affairs in New Delhi, “Sri Lanka is a close friend and neighbor, and India has stood with the people of Sri Lanka at all times”.

Further, it was also stated that Mr. Jaishankar’s visit to Colombo demonstrates the significance India places on its close and cordial relations with Sri Lanka. Sri Lanka was stuck by an enormous financial crisis in 2022, the worst since its independence from Britain in 1948, as a result of a severe shortage of foreign exchange reserves, which sparked political unrest in the nation and led to the removal of the all-powerful then-government.

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