New Delhi/ Colombo/ Beijing | Jagran News Desk: Sri Lankan Finance Minister Basil Rajapaksa will visit India next month to formalise New Delhi's economic relief package for the island nation, the country's Foreign Minister GL Peiris had confirmed last week.
Last month, India had announced a USD 900 million loan for Sri Lanka to build up its depleted foreign reserves and help the island nation overcome its economic crisis. Stressing that India has always stood by the side of Sri Lanka, New Delhi said it support Sri Lanka in "these difficult times."
"Greeted FM G.L. Peiris of Sri Lanka in the New Year. A reliable friend, India will support Sri Lanka in these difficult times. Agreed to remain in close touch," External Affairs Minister (EAM) Dr S Jaishankar had tweeted.
Sri Lanka's economy has been hit hard by the COVID-19 pandemic and the Chinese "debt trap" policy that has triggered a humanitarian crisis that has forced the island nation to move towards India once again.
According to Washington-based group Global Strat View, Sri Lanka's foreign debt has increased steadily since 2014 (30 per cent of GDP), reaching 41.3 per cent of GDP in 2019.
The report claimed Sri Lanka's foreign reserves stand around USD 1.6 billion, which is barely enough for a few weeks of imports, adding it has foreign debt obligations exceeding USD 7 billion in 2022.
The Global Strat View further said the inflation rate had increased to 12.1 per cent by the end of December last year while the food inflation was at nearly 22 per cent.
"Sri Lanka is commonly described as a country that has fallen into debt due to public investment projects sponsored by China as part of its Belt and Road Initiative, a long-term effort to fund and construct infrastructure linking China to the rest of the world," it said.
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Last month, during Chinese Foreign Minister Wang Yi's visit to the island nation, Sri Lankan President Gotabaya Rajapaksa had urged him to give a breather. However, his request was rejected by the Chinese government.
"Sri Lanka will surely overcome the temporary difficulties as soon as possible," Chinese Foreign Ministry Spokesperson Wang Wenbin had remarked.
India, a trusted ally?
As the Sri Lankan economy continues to deteriorate, India has already approved USD 2.4 billion financial assistance for the island nation. This was done post Peiris' two-day official visit to India from February 6 to 8.
The Indian High Commissioner in Sri Lanka has also handed a consignment of more than 40,000 MT fuel to Sri Lanka.
"#India - a committed partner and a true friend of #SriLanka. High Commissioner handed over 40,000 MT fuel consignment by @IndianOilcl to Hon'ble Energy Minister @UPGammanpila today. India and Sri Lanka partnership continues to work towards energy security of #lka," it tweeted earlier.
The two countries have also an agreement to jointly redevelop the strategic World War II-era oil tank farm in Sri Lanka's Trincomalee.
Analysts, quoted by news agency PTI, have said India's financial help for Sri Lanka is a "key assistance" for the island nation which is going through a foreign currency shortage situation.
However, some believe that while India's assistance has given Sri Lanka some breathing space, "tough measures, including a bailout from the International Monetary Fund (IMF) was needed to prevent the economy from heading into a perpetual tailspin."