Sri Lanka to enhance FTA with India to recover economy

Sri Lankan President Ranil Wickremesinghe on Wednesday announced that steps have been taken to enhance free trade agreement (FTA) with India.

He also announced that plans are underway to pursue FTAs with China, Indonesia and Bangladesh in the future.

Presenting the policy statement of the government during the Parliament session, President Wickremesinghe detailed his plans to forge FTAs with number of countries and establishing a new network of economic relationships that can help the debt-stricken island’s products’ entry into foreign markets.

“We will join the Regional Comprehensive Economic Partnership (RCEP). We will connect with the common system of trade variations in the European Union,” President Wickremesinghe said.

He said that with India’s support, Sri Lanka plans to transform the country’s Eastern port district Trincomalee to a multi-faceted regional hub which will in turn shift the 46 per cent of the country’s economy centered in the Western Province to other parts of the country.

Wickremesinghe’s announcement on FTAs with the regional countries follows Saturday’s major trade pact signed with Thailand Prime Minister Srettha Thavisin who was in Colombo as the chief guest on country’s 76th Independence Day celebration.

The FTA covering trade in goods, investment and custom procedures is expected to boost two-way trade from $352 million in 2022 up to $1.5 billion between Sri Lanka and Thailand.

President Wickremesinghe said in September, 2023, Sri Lanka’s total debt burden was $91 billion but the economy was recovering with inflation reducing to 6.4 per cent from 50.6 per cent compared to last year.

He said the foreign reserve that hit zero in 2022 has increased to $4.4 billion by the end of December, 2023.

Wickremesinghe took over presidency in July 2022 from his predecessor Gotabaya Rajapaksa who fled the country following public outrage over severe economic crisis.

The island nation with 21 million population declared bankruptcy in April, 2022.

India was the first nation to help crisis-hit country by providing more than $4billion financial assistance including much needed food, medicine and fuel. India also helped Sri Lanka to get the IMF’s $2.9 billion bailout out package in 2023.