During the Raisina Dialogue ‘Ideas Pod,’ Sri Lanka’s Foreign Minister Ali Sabry stated that India helped Sri Lanka more than any other country, especially during the island nation’s unprecedented crisis.
While the Indian government made some bold decisions to assist the country in overcoming its economic crisis, the Indian public also came forward to support Sri Lanka, according to the country’s foreign minister in a podcast released on Tuesday.
Sabry said, “Your real friends are tested when bad time comes. India has stood by us, a friend in need and a friend indeed that they say. So we are very grateful to India, for what it has done for us.”
The Sri Lankan Foreign Minister also stated that the Indian government took very bold and decisive actions by providing the island nation with approximately 3.9 billion in bilateral credit and accreditation. He went on to say that it was the line that gave Sri Lanka the chance to fight another day, and that it likely saved the bankrupt country from oblivion.
Sabry recalled India’s efforts to save Sri Lanka from drowning in debt, saying that India comes at the very beginning. He went on to say that India’s intervention was greater than that of the other countries. India sent financing guarantees to the International Monetary Fund (IMF), becoming the first of the island nation’s creditors to officially support the debt restructuring programme.
“This takes Sri Lanka one step closer to getting a crucial USD 2.9-billion package from the IMF, made contingent on “receiving financing assurances from Sri Lanka’s official creditors and making a good faith effort to reach a collaborative agreement with private creditors,” Sabry said.
The Sri Lankan foreign affairs minister was in New Delhi on an official visit to attend the Raisina Dialogue – 2023, India’s premier conference on geopolitics and geoeconomics, which was co-hosted by the Observer Research Foundation and the Ministry of External Affairs of India from March 2-4.
Notably, China, Japan, and India are the three largest bilateral lenders to Sri Lanka.
External Affairs Minister S Jaishankar visited Sri Lanka in January and stated that India is committed to increasing investment flows to Sri Lanka in order to accelerate its economic recovery.
Talking regarding the IMF bailout package at Raisina Dialogue ‘Ideas Pod’, Sri Lanka’s Foreign Minister said, “Yeah, I think it will help out in the sense when it comes to IMF bailing out of a country which has been declared bankrupt or otherwise, it had been declared as unsustainable of paying the debt.” There are two components.
“One is you have to get debt assurances from the bilaterals which is not challenging. And as far as the IMF pre-actions that we need to take in terms of the staff level agreement we have taken all those things of 15 of them for example cost, reflective pricing, more revenue basis, and then independent central bank. So many of those things we have done,” Sabry said.
“I think those things we could have done or should have done with or without IMF, which is good for the country, though it is not very popular. But the problem is how to sell these reforms to the people because it will directly affect them. All these files, what we have done is used printing machine to print the money and then inflation resulted in that giving hope to people,” he added.
He also stated that the IMF will instill a great deal of confidence in the country. It will most likely reintroduce the island nation to the financial market, as well as reopen an investment that was halted about a year ago.
After the COVID-19 pandemic impacted tourism and remittances from citizens working abroad, Sri Lanka fell into a financial crisis. The conflict in Ukraine exacerbated the crisis, as import prices, particularly for fuel, rose sharply due to soaring inflation.
With fuel and medicine shortages worsening, thousands of protestors took to the streets and stormed government buildings, forcing President Gotabaye Rajapakse to flee the country and resign from abroad in July last year.
Ranil Wickremesinghe was elected President of Sri Lanka in July after defeating his main rival, Dullus Alahapperuma, in a parliamentary vote by 134 votes to 82.