As close friends and maritime neighbours, both India and Sri Lanka stand to benefit from close economic ties, Jaishankar said during the virtual interaction.
India’s financial package has kept Sri Lanka from spiraling into a major economic tailwind for some time, top economist WA Wijewardene said on Saturday, but warned that the Gotabaya Rajapaksa regime should be asked by the IMF to tide over the foreign exchange. Will need to take a bailout. The country is facing shortage.
Amid a shortage of almost all essential commodities in the island nation, India on Thursday announced a USD 900 million loan to Sri Lanka for its dwindling foreign reserves and food imports.
Indian High Commissioner to Sri Lanka Gopal Baglay met Central Bank Governor Ajit Nivard Cabral and “expressed India’s strong support to Sri Lanka in the wake of RBI expanding facilities worth over USD 900 million over the past week”.
“These include the postponement of the Asian Clearing Association agreement of over USD 509 million and a currency swap of USD 400 million,” the Indian High Commission’s tweet said.
“India’s economic package following the international sovereign bond settlement due on January 18 has averted an immediate economic crisis. swap of
USD 400 million helped in improving the gross reserves to an extent. The Indian credit line of USD 1.5 billion will also ease the shortage of essential commodities through imports from India,” said Wijewardene, former deputy governor of the Sri Lankan Central Bank.
Wijewardene said India’s timely assistance has given the Sri Lankan government two months of breathing space, a time that needs to implement tough economic reforms and a bailout from the International Monetary Fund (IMF) for a permanent solution. the wanted.
“India’s intervention has helped Sri Lanka, but they cannot give us relief. While we need to honor the promises made to India to realize the benefits. In the meantime, we need to seek help from the IMF,” he insisted.
Wijawardene’s remarks came after External Affairs Minister S Jaishankar and Sri Lankan Finance Minister Basil Rajapaksa held a comprehensive virtual meeting on Indian economic aid to Sri Lanka on Saturday.
During the meeting, Jaishankar pointed out that India has always stood by Sri Lanka, and continues to support that country in all possible ways to overcome the economic and other challenges posed by the COVID-19 pandemic, in a statement issued by the Ministry of External Affairs. Will keep said.
As close friends and maritime neighbours, both India and Sri Lanka stand to benefit from close economic ties, Jaishankar said during the virtual interaction. The issue of the IMF bailout has been controversial, deeply divided the Sri Lankan cabinet.
Sri Lanka’s GDP fell by a record 3.6 percent in 2020 and its foreign exchange reserves fell by more than half in the one year through July to just $2.8 billion.
This has caused the Sri Lankan rupee to depreciate by over 9 per cent against the US dollar in the past 12 months, making imports more expensive. The island nation is also facing a severe foreign exchange crisis after the pandemic affected the country’s earnings from tourism and remittances.
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