Categories: World

India, Sri Lanka inch closer to a financial deal as Chinese Foreign Minister Wang Yi plans a visit

<p>
India is likely to extend a financial deal to Sri Lanka to help it tide over its foreign exchange woes even as it pursues the island nation to jointly develop the Trincomalee oil tank farm.<br />
<br />
The island nation has fast-tracked the oil tank farm project over the past few weeks which has been in the waiting for decades owing to various hurdles like the LTTE insurgency and opposition by the nation's trade unions. India and Sri Lanka have been discussing the modalities of the project for over a year.<br />
<br />
Sri Lankan Finance Minister Basil Rajapaksa had <a href="https://www.indianarrative.com/world-news/sri-lanka-likely-to-seek-billion-credit-from-india-as-colombo-rediscovers-time-tested-ally-131457.html">visited India early December</a> to seek financial help for his country which is going through a bad patch with rising food prices, falling rupee, shortage of fuel and foreign exchange reserves at a low of $1.6 billion in November–just enough for a month's imports.<br />
<br />
India had reportedly assured him of help with a four-pronged package, consisting of a line of credit, an energy security deal, offer of currency swap and Indian investments that would recharge and help grow the Sri Lankan economy.<br />
<br />
India's financial assistance is likely to be in the form of a $400 million currency swap to help Sri Lanka address balance of payment issues, a $1 billion line of credit for importing essential items like food and medicine from India and a $500 million line of credit to import fuel from India, reports Sri Lanka's <a href="https://island.lk/india-keen-to-see-credit-line-to-sri-lanka-and-trincomalee-oil-tank-farm-deal-progress-in-tandem/"><em>The Sunday Island</em></a>. <br />
<br />
Basil Rajapaksa is the youngest of the trinity at the helm of affairs in Colombo with brothers Gotabaya Rajapaksa and Mahinda Rajapaksa as the President and Prime Minister respectively. He plans to visit India once again to attend the Vibrant Gujarat Summit from 10-12 January 2022. He is likely to meet Prime Minister Narendra Modi, reports <a href="https://www.newsfirst.lk/2021/12/31/basil-to-make-second-visit-to-india/">Sri Lankan website <em>News First</em></a>.</p>
<p>
The Indian Ocean island nation has <a href="https://www.indianarrative.com/world-news/foreign-exchange-crisis-forces-sri-lanka-to-close-missions-in-germany-nigeria-and-cyprus-138330.html">taken unprecedented measures</a> to control its financial crisis.<br />
<br />
The India-Sri Lanka bonhomie has seen underlying tensions with China's deep economic tentacles in Colombo casting suspicion in New Delhi.<br />
<br />
Colombo's rosy relations with Beijing too have seen choppy waters, with Chinese fertiliser firm <a href="https://www.indianarrative.com/world-news/under-legal-pressure-sri-lanka-decides-to-pay-million-to-qingdao-for-rejected-fertiliser-135021.html">Qingdao Seawin Biotech hauling up Sri Lanka for arbitration</a> in Singapore over a rejected fertiliser deal. The Chinese embassy in Colombo joined the spat between the firm and Sri Lanka's agriculture and fertiliser departments, adding to diplomatic tension between the two allies.<br />
<br />
Foreign Ministry spokesman Zhao Lijian told media persons in Beijing on Thursday that Foreign Minister Wang Yi plans to visit Sri Lanka in January. His visit will mark the 65th anniversary of China-Sri Lanka diplomatic relations.<br />
<br />
Wang is likely to come up with investment proposals to shore up the crumbling economy, including financing for the $1.4 billion Colombo Port City project. Wang is also likely to mend the tear in bilateral relations that have soured over the fertiliser deal.</p>

Rahul Kumar

Rahul Kumar writes on international issues and is a keen watcher of South Asia, environment, urban development and NGOs.

Recent Posts

Lebanon: Israel conducts precision airstrikes on Hezbollah’s UAV production, storage sites and drone workshop

Israeli Defence Forces (IDF) shared operational details of conducting precision strikes at Hezbollah targets in…

2 hours ago

Productive discussions on connectivity, security, terrorism: Jaishankar at India-Central Asia Dialogue

External Affairs Minister S Jaishankar, chairing the 4th India-Central Asia Dialogue in Delhi on Thursday,…

3 hours ago

Tata Electronics, BEL join hands to advance India’s electronics, semiconductors ecosystem

Tata Electronics and state-owned firm Bharat Electronics (BEL) have joined hands to advance the development…

3 hours ago

Israel’s Defence Minister slams Lebanese President for criticizing strikes on Hezbollah

Israel's Defence Minister Israel Katz responded to criticism leveled at Israel by Lebanese President Joseph…

4 hours ago

ETGE alleges Uyghur militants in Syria exploited by Chinese Intelligence, seeks US support

The East Turkistan Government in Exile expresses deep concern regarding the purported incorporation of Uyghur…

5 hours ago

“All good work is indeed left for me only to complete,” says PM Modi as he inaugurates major railway projects in J-K

Noting that the newly inaugurated Chenab and Anji Bridges will not only connect Jammu and…

5 hours ago