India Firmly Backs Sri Lanka's Bid To Secure $2.9 Billion IMF Bailout Package

External Affairs Minister S Jaishankar announced on Friday that India has given the required assurances to debt-ridden Sri Lanka for the much-needed IMF bailout package, becoming the first major lender to publicly back the island nation's efforts to recover from its worst-ever economic crisis.

Jaishankar, who is here on a two-day visit, called on President Ranil Wickremesinghe on Friday morning and also held talks with Foreign Minister Ali Sabry."My primary purpose to visit Colombo is to express India's solidarity with Sri Lanka during these difficult moments," Jaishankar said in a press statement along with Sabry. 

"We've had a very good discussion that follows up on my meetings with my counterpart and other Sri Lankan ministers yesterday (Thursday) evening," he said.

India has extended about USD 4 billion in terms of credits and rollovers to help Sri Lanka get through its worst economic crisis since independence in 1948. 

"For us, it was an issue of the Neighbourhood First and not leaving a partner to fend for themselves. This year, in a developing situation that was beginning to cause concern, the same sentiment reasserted itself," Jaishankar said. 

India felt strongly that Sri Lanka's creditors must take proactive steps to facilitate its recovery, he told the media in the presence of President Wickremesinghe.

"India decided not to wait for others, but to do what we believe is right," he added.

"We extended financing assurances to the IMF to clear the way for Sri Lanka to move forward. Our expectation is that this will not only strengthen Sri Lanka's position but ensure that all bilateral creditors are dealt with equally," he added.

Sri Lanka, which is trying to secure a USD 2.9 billion bridge loan from the International Monetary Fund (IMF), was negotiating to get financial assurances from its major creditors - China, Japan and India - which is the requisite for Colombo to get the bailout package.

The IMF bailout has been put on a hold as Sri Lanka pursues talks with creditors to meet the global lender’s conditions for it.

"Sri Lanka's pathway is one of a strong economic recovery propelled by greater investments. Here too. I have a clear message that I will be sharing with the business community," Jaishankar said.

"India will encourage greater investments in the Sri Lankan economy, especially in the core areas like energy, tourism and infrastructure. We count on the Government of Sri Lanka to provide a more business-friendly environment to create a powerful pull factor. I am confident that the gravity of the situation is realised by policymakers here," Jaishankar said.

India has always supported both the political and economic stability of Sri Lanka," Jaishankar said.

He said President Wickremesinghe briefed him on the question of political devolution.

"I shared with him our considered view that the full implementation of the 13th Amendment and early conduct of provincial elections are critical".

"Durable efforts towards reconciliation are in the interests of all sections in Sri Lanka. I also spoke of the need to pay special attention to the requirements of the Indian-origin Tamil community," he said.

India has been pressing Sri Lanka to implement the 13th Amendment to the Constitution which was brought in after the Indo-Sri Lankan agreement of 1987. The 13A provides for the devolution of power to the Tamil community. 

Jaishankar said energy security is today one of Sri Lanka's most serious challenges. 

"A search for solutions must necessarily encompass the larger region. Only then will Sri Lanka get the full benefit of scale. This country has enormous renewable energy potential that can become a sustainable source of revenue. It has the capability as well for Trincomalee to emerge as an energy hub," Jaishankar said.

In its support for Sri Lanka, India is prepared to be a "reliable partner" on such initiatives, he added.

"We have today agreed in-principle on a renewable energy framework that would take this cooperation forward," he said.

Calling tourism the lifeblood of the Sri Lankan economy, he said "Indian tourists are expressing their positive sentiments for Sri Lanka in a very, very practical manner by coming here."`

There are many more steps the two countries can take to make it sustainable.     "Strengthening connectivity and promoting travel is therefore a very high priority for all of us. Definitely, encouraging Indian tourists to make RuPay payments and utilise UPI would be most helpful in this," he said.

In a turbulent world, it is essential that India and Sri Lanka steady their trade, the minister said.

"The use of rupee settlement for trade is obviously in our mutual interest," he added.

He also handed over Prime Minister Narendra Modi's invitation to President  Wickremesinghe to visit India at an early date to discuss how the bilateral partnership can facilitate Sri Lanka's strong recovery.

"I would like to underline that India is a reliable neighbour, a trustworthy partner, one who is prepared to go the extra mile when Sri Lanka feels the need. My presence here today is a statement about Prime Minister Modi’s commitment to ‘Neighbourhood First’," he said.

India will stand by Sri Lanka in the hour of need and is confident that Sri Lanka will overcome the challenges that it currently faces, Jaishankar said.

In his remarks, Sabry conveyed profound gratitude to India for its support to Sri Lanka.

"It is no exaggeration to say that it was for the most part due to the enormous support amounting to USD 4 billion worth of credit line provided by India for the import of essential goods, as well as other humanitarian assistance that we were able to regain some measure of economic and financial stability," he said.

"We are all aware that Sri Lanka is at a decisive moment in discussion with the IMF. In order to place our economy on the path of IMF-assisted recovery, we needed timely assurances from our creditors," he said.

Once again, India has extended its hand in support of the first country to officially back our debt restructuring programme by conveying financial assurance, he added.

"We are profoundly grateful to India for once again, demonstrating your confidence in and solidarity with Sri Lanka," Sabry said.

During Jaishankar's visit, an MOU was finalised on Indian grant assistance for the implementation of high-impact community development projects, which mainly focus on socio-economic development, infrastructure and education, health and community development sectors.

"During our bilateral discussion, we have explored the possibilities of further collaboration in the coming years," he said

"We are watching India's economic success and international prestige with great admiration," Sabry said.