In Crisis-Hit Sri Lanka, Jaishankar Assures Leaders of Support, Welcomes TNA-Govt Talks

Sri Lanka is in the midst of an unprecedented economic crisis due to a shortage of foreign exchange, fuelled by a balance of payments and sovereign debt crisis.

New Delhi: Just as Indian external affairs minister S. Jaishankar visits Sri Lanka, the economic crisis-hit Indian Ocean nation is seeking an additional $1.5 billion line of credit from New Delhi to pay for imports of essential commodities.

Jaishankar arrived in Colombo for a three-day visit to Sri Lanka, primarily take part in the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) summit.

But ahead of the multilateral meetings, he had a slew of bilateral appointments with the top Sri Lankan leadership, including President Gotabaya Rajapaksa, Prime Minister Mahinda Rajapaksa and his counterpart, G.L. Peiris. He also met with several cabinet ministers and held discussions with a Sri Lankan Tamil delegation.

As a sign of the tumultuous backdrop of Jaishankar’s visit, the Indian foreign minister visited a filling station of the Lanka Indian Oil Corporation in the Sri Lankan capital.

Sri Lanka is in the midst of an unprecedented economic crisis due to a shortage of foreign exchange, fuelled by a balance of payments and sovereign debt crisis. The power supply remains unstable as electricity generating stations remain idle, with crude tankers waiting offshore as the government raises foreign exchange on a day-to-day basis. With Sri Lanka unable to pay for fuel imports, citizens have to wait for hours in long lines in front of fuel stations.

A day earlier, an 84-year-old man died in a queue for fuel in a suburb of Colombo. The business portal, EconomyNext, reported that the man was found dead in his car, waiting in line at a filling station. He was clutching Rs 3,000 to pay for fuel in his hand. The official cause was a heart attack.

According to the local media, he was the fifth person to have died in a fuel line in the last week.

India has, so far, provided a $400 million currency swap arrangement under the SAARC framework and deferred an Asian Clearing Union (ACU) settlement of $515.2 million till May this year.

New Delhi has also extended two lines of credit – $1 billion for procurement of essential items and another $500 million for importing fuel from India.

In addition, Sri Lanka has also sought an additional line of credit of $1.5 billion to pay for more essential items.

“There is a very close discussion continuing for an additional support of $1.5 billion (with India) by way of oil support as well as other essential goods support of credit terms,” Central Bank of Sri Lanka governor Ajith Nivard Cabraal told an online seminar on India-Sri Lankan relations.

After meeting with President Rajapaksa, Jaishankar tweeted that he was assured of “India’s continued cooperation and understanding”.

Along with India, Sri Lanka has also been in talks with China for a $2.5 billion line of credit to alleviate the current situation.

Sri Lanka is also scheduled to start talks with International Monetary Fund, with finance minister Basil Rajapaksa travelling to the United States.

Besides economic issues, the ongoing talks between the Tamil National Alliance (TNA) and the Sri Lankan government also figured in Jaishankar’s official discussions.

A statement from the Indian high commission said that President Rajapaksa, foreign minister Peiris and the TNA delegation briefed Jaishankar on the talks.

“On his part, EAM welcomed in all these interactions the positive developments regarding the issues on the Government-TNA agenda. He emphasised that the Government of India was consistently supportive of the realisation of the aspirations of the Tamils of Sri Lanka for equality, justice, peace and dignity within the framework of a united Sri Lanka,” said the statement.