During a joint press conference with Sri Lanka’s president and foreign minister, India’s foreign minister Subrahmanyam Jaishankar stated that “India decided not to wait for others but to do what we believe is right. We extended financing assurances to IMF to clear the way for Sri Lanka to move forward”.
The decision which came prior to his 2-day trip to the island leaves China as the sole major creditor which has yet to agree to the debt restructuring plans which enable Sri Lanka a $2.9 billion loan from the International Monetary Fund (IMF). Unless all of the island’s major bilateral creditors agree to Sri Lanka’s debt structuring plan before the end of the month, Sri Lanka will likely only receive the first tranche of IMF funding, worth $362 million, in the second quarter of 2023.
Jaishankar explained that for India, “it was an issue of neighbourhood first and not leaving a partner to fend for themselves”. He further noted that last year, India provided Sri Lanka with an estimate $ 4 billion in rapid assistance between January and July, including credit lines, a currency swap arrangement and deferred import payments.
Responding to the US ambassador to Sri Lanka, Julie Chung tweeted:
Pleased to see India confirm strong support for SL's prospective EFF program & commit to providing financing/debt relief transparently & in coordination w Paris Club. The US stands ready to assist SL to unlock IMF assistance when all creditors agree to fair & equitable treatment.
— Ambassador Julie Chung (@USAmbSL) January 19, 2023
Further speaking to BBC Newsnight, she slammed China’s delayed response, claiming that the country was acting as a “spoiler”.
“Beijing has said they are a friend of Sri Lanka and I’m sure Sri Lankan people would love to see that turn into action and make sure that there’s not a delay […] Sri Lanka does not have time to delay, they need these assurances immediately. And, we have seen again delays in Zambia, Chad and other countries, where for one reason or another its been held up and China has been the spoiler”.
China’s response
Responding to Newsnight interview, China’s embassy in Sri Lanka released a statement lashing out against the US.
“Before her baseless accusing and lecturing, our US colleague should have at least asked herself: who is the single largest shareholder of the IMF with a veto power over major policy decisions? Who is keeping printing US dollar, with more than $3 trillion in 2020 alone? Who are the private creditors owning 40% of Sri Lanka’s total external debt stock with the highest interest rates? Who sued Sri Lanka in its federal court immediately after the island’s default?”
China's reluctance to commit to debt restructuring in Sri Lanka comes despite its decision to continue bankrolling the island’s military and providing a Rs 5 million to develop Sri Lanka’s National Cadet Corps (NCC). Increasingly Chinese presence on the island has been seen by Indian authorities as a security threat.
India’s trade agreements
India and Sri Lanka are expected to sign a Memorandum of Understanding covering renewable energy projects in three islets just off the coast of Jaffna, which had previously been pledged to Chinese authorities.
Speaking at the media conference, Jaishankar reaffirmed India’s commitments to Sri Lanka and highlighted the country’s interest in investing in Sri Lanka’s energy sector, tourism and infrastructure. He also extended an invitation to Sri Lanka’s president to visit India from India’s Prime Minister.
Devolution
During the media conference, Jaishankar also discussed the issue of devolution.
Sri Lanka’s “President briefed me on the question of political devolution and his thinking I share with him our considered view that the full implementation of the 13th amendment and early conduct of provincial elections are critical in this election”.
The Indian foreign minister also stressed that “durable efforts to reconciliation are in the interests of all sections in Sri Lanka” and need to pay special attention to Tamils of Indian origin.
The statement follows a letter from the Tamil National People’s Front (TNPF) which stressed that 13th amendment is not a sufficient starting point to deal with Tamil grievances and instead calls for a federal solution.
Read more here: TNPF urges India to bring about a federal solution
Meeting with the opposition
Called on former President @PresRajapaksa today.
Discussed the current challenges faced by Sri Lanka and India’s strong support in this hour of need. pic.twitter.com/vXxDJJqHuR
— Dr. S. Jaishankar (@DrSJaishankar) January 20, 2023
Whilst on the island, Jaishankar also met with Sri Lanka’s former President Mahinda Rajapaksa who to discuss the island’s current challenges. The meeting follows landmark sanctions announced by the Canadian government against Mahinda and Gotabaya Rajapaksa for their responsibility for “gross and systematic violations of human rights during the armed conflict in Sri Lanka”.
During mass protests over the economic crisis which engulfed Sri Lanka, Mahinda Rajapaksa was forced to resign from his position as prime minister whilst his brother, Gotabaya, was forced into exile. Returning to the island only after tendering his resignation in Singapore.
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