India expected to send ‘positive’ message on debt during Jaishankar’s visit to Sri Lanka

External Affairs Minister of India, S. Jaishankar’s visit to Colombo on Thursday will focus on “supporting Sri Lanka” in its current economic crisis, government sources said, adding that talks are ongoing in the field of energy security, food security, currency swap arrangements as well as talks about restructuring Sri Lanka’s debt. The two-day visit is expected to see some announcements.

“India is expected to give a positive response to Sri Lanka’s requirements, in keeping with India’s support last year as well,” said a source, citing India’s combined package of about $4 billion including loans, credit lines for the purchase of essentials and a loan deferment through the Asian Clearing Union.

In addition, talks are expected on two possible MoUs— on the Trincomalee development project and the long-pending plan for a cross-strait transmission line that would allow Sri Lanka access to India’s plans for an energy grid along with other countries like Nepal, Bhutan and Bangladesh.

The sources stressed that while assisting Sri Lanka with its current economic difficulties is a priority, Mr. Jaishankar’s visit, his first with the six-month-old government in Colombo, would see a comprehensive review of bilateral ties.

Meanwhile, diplomatic sources said that the support, in the form of “written financial assurances” from India would be critical for Sri Lanka as it works with its other creditors to resolve the economic crisis.

Announcing the visit by EAM Jaishankar, Sri Lankan President Ranil Wickremesinghe said that he had discussed the need for the debt restructuring programme with all Sri Lanka’s creditors, including the 22-nation ‘Paris Club’ of 22 developed nations that hold much of the global debt and discuss solutions to debt crisis together.

“Japan and the Paris Club, two of our major creditors, have expressed their willingness to assist. We have already begun talks with India and China. According to the discussions with China Exim Bank recently, we’re currently debating on how to restructure our debt. The Chinese side has agreed to move quickly,” Mr. Wickremesinghe told a group of businessmen last week.

He said that Sri Lanka’s “only” option was to seek the support of the International Monetary Fund (IMF) for nearly three billion dollar bailout, and was also hopeful of a package from the Asian Development Bank (ADB).

“We discussed with China’s EXIM Bank this week and by now we have commenced exchanging views on it. India’s Foreign Minister is scheduled to visit Sri Lanka on the 19th to discuss the debt restructuring process. We are proceeding with these activities gradually,” the Sri Lankan President said to a separate group of trade union representatives, indicating the visit by Japanese State Minister of the Cabinet Office Satoshi Fujimaru and the ongoing visit of Chen Zhou, Vice Minister of the International Department, the Communist Party of China Central Committee.

After Mr. Chen’s meeting with President Wickremesinghe, the Chinese Embassy in Sri Lanka said the talks were “friendly and fruitful”, and quoted Mr. Wickremesinghe as saying that he “looked forward to China’s support in restructuring Sri Lanka’s debt at the moment and our economy in the near future”.

Sri Lanka had hoped to finalise its IMF bailout package, but missed a December deadline due to the delay in concluding debt restructure talks. It now hopes to complete the talks in the first quarter of 2023.