Finance Minister to visit India for ‘Vibrant Gujarat’ summit

Basil Rajapaksa

Sri Lanka’s Finance Minister Basil Rajapaksa would lead a delegation to the ‘Vibrant Gujarat’ summit to be held from January 10 to 12, Indian media reported quoting official sources.

He is likely to hold talks with Prime Minister Narendra Modi during this visit, his second to India in about a month, according to The Hindu.

It said the Minister would travel to India a day after Chinese Foreign Minister Wang Yi concludes his two-day visit to the island nation, signalling Colombo’s intensive engagement with both New Delhi and Beijing at a time when it faces one of its worst economic meltdowns in history.

Mr. Basil Rajapaksa was in New Delhi from November 30 to December 02. Despite officials indicating that he was scheduled to call on Mr. Modi, the meeting did not take place, reportedly due to scheduling issues.

He, however, held talks with India’s External Affairs Minister S. Jaishankar and Finance Minister Nirmala Sitharaman. They drew up a “four pillar” initiative, as part of which India agreed to extend emergency Lines of Credit for import of food, medicines and fuel, and a currency swap to help the island nation tide over its relentless dollar crisis.

Sri Lanka’s external reserves stood at $3.1 billion at year-end, the Central Bank of Sri Lanka said on Wednesday — an increase from the $1.6 billion reported last month — although some have challenged the claim, asking if the bank was including the $1.5 billion currency swap cleared by China earlier this year.

Colombo-based think tank Pathfinder Foundation has warned of “a very real possibility of a sovereign debt default” next year, citing the $ 1 billion due in debt-service payment in January 2022, and a total of $ 7 billion to be served through the next year.

American credit rating agency Fitch on December 17 downgraded Sri Lanka to ‘CC’ rating, the lowest before default.

A month since Mr. Basil’s last visit seeking assistance from New Delhi, Colombo awaits news. In fact, New Delhi is yet to move on Prime Minister Mahinda Rajapaksa’s request for a debt freeze, made personally to Mr. Modi almost two years ago, as well as President Gotabaya Rajapaksa’s request for a “special” $1.1 billion currency swap made in May 2020.

Going by diplomatic signals, the operative part of the recent bilateral initiative of the “four pillars” appears centred on bilateral energy pacts, especially the “early modernisation” of the Second World War-era oil tanks in the eastern Trincomalee district, a long-stalled project coveted by India for decades.

Sri Lanka’s Energy Minister recently told The Hindu that the agreement to jointly develop the Trincomalee oil tank farm with India would be inked in a month’s time and that a special purpose vehicle had been set up for the purpose.

It is unclear if Mr. Basil Rajapaksa’s likely meeting with Mr. Modi will be held in Gujarat on the sidelines of the summit, or if he would fly to New Delhi for talks. Colombo-based sources indicated that the meeting with Mr. Modi would be firmed up based on developments in the next week. “We are looking at an ambitious timeline,” The Hindu quoted the remarks of an official, who spoke on condition of anonymity given the sensitivity of bilateral negotiations. “Both sides are keen to take discussions forward swiftly,” the official added.

Sri Lanka had been identified as one of the “partner countries” for the ‘Vibrant Gujarat’ summit, where participants would explore investment and networking opportunities, and strategic partnerships, an official statement said.