India’s Support Has Made A World Of Difference To Our Economic Situation: Sri Lankan FM G L Peiris

Sri Lankan Foreign Minister G L Peiris, on his first visit to India since he was appointed last year, said that India’s support made a “world of difference” to Sri Lanka’s economic situation.

The comment comes after a series of agreements announced in recent weeks, which include one billion dollars in various lines of credit, a currency swap arrangement of $400 million and a debt deferral of $515 million for two months from India.

In an interview to The Hindu, Peiris said: “There’s no doubt whatsoever that Indian support at this critical juncture has made a world of difference. It has helped us to tide over the immediate difficulties which were obviously acute.”

As a part of his three-day visit to India, on Monday (7 February), Peiris met with External Affairs Minister (EAM) S Jaishankar and Foreign Secretary Harsh Shringla and, as per a tweet by the EAM, held "productive talks" on various avenues of cooperation.

Apart from the abovementioned projects, India and Sri Lanka have planned a number of infrastructure projects involving the private sector, which will be discussed further in the Sri Lankan Finance Minister Basil Rajapaksa's visit to Delhi in the next few weeks. Reportedly, Sri Lanka has also invited Prime Minister Narendra Modi to attend the BIMSTEC summit in Colombo on 30 March, and hold “substantive” bilateral talks.

A major success is the conclusion of the long pending agreement to jointly develop oil tank facilities in Trincomalee. "After the great deal of discussion, we have been able to arrive at an agreement for 24 of the oil tank farms for the Ceylon Petroleum Corporation and 14 for Indian oil. Then the remaining 61 is to be a joint venture with Sri Lanka having 51 per cent and India 49 per cent. All of that has been agreed and the only thing that remains to be done is the signing of the lease," he said.

"The Indian support has several components, one of which is a 1 billion line of credit for the purchase of essential food items, pharmaceutical products, this is exceedingly useful for us at this time, there is also support for the purchase of oil. That is crucial. And India has offered $500 million through the ExIm Bank of India, and that’s revolving credit, it will be replenished as we use it, and pay back."

"As far as the balance of payments situation is concerned, Indian support has gone a long way to help us as you mentioned, the Asian Clearing House union that’s about $515 million. We have been granted different postponement of it and also exceedingly useful was the soft currency swap of 400 million US dollars."

"So cumulatively in total, all of these amounts to very substantial assistance, which we appreciate. My colleague [Finance Minister] Basil Rajapaksa, was here. And he’s due to come on a second visit soon after the 16th of this month to consolidate these agreements. And there’s also been Indian enthusiasm to encourage the Indian private sector to come in a big way into several sectors including hospitality, food processing, cement, possibly, and pharmaceutical production."

“All of this has engendered a degree of confidence which we didn’t see in the immediate past. And it has brought into being very special relation… there is a feeling that India has always stepped in when Sri Lanka needed it whether it has been economic, or Covid or the maritime oil spill we had,” Peiris added.

With regards to relationship with China, Peiris said apprehensions in India in this regard were not “logical”, and the relationship with China was not at the “expense of India”. Colombo formally requested the Chinese Foreign Minister Wang Yi during his visit to the island last month to restructure Sri Lanka’s debt, given its economic problems.

Another issue of contention between the two countries has been reconciliation with the Tamil minority and devolution of power to the North and East Sri Lanka where it is concentrated. In January, several legislators from the North and East had written a letter directly to PM Modi, seeking India’s intervention to make sure Sri Lankan government moves forward with the process.

On the issue, Peiris said that a committee of experts would submit a draft on the issue within two months to the President’s Council, but added that no decision can be implemented unless there is “sufficient consensus” from Sri Lanka’s Sinhala majority.

The Sri Lankan Foreign Minister also mentioned other projects being undertaken by the two countries: training of 500-600 Sri Lankan military and police officers in India; trilateral arrangement on counter-terrorism between India, Maldives and Sri Lanka; a fund PM Modi initiated for the improvement of Buddhist temples; MoU between diplomat training institutes; purchase of 2 Dornier planes; a 4,000 tonne floating doc project; and the Jaffna cultural centre.

Peiris also cautioned that the unresolved issue of fishing rights is a “constant irritant” in bilateral relations which must be resolved through talks. Recently, the clashes between Indian and Sri Lankan fishermen led to the death of two Sri Lankans.

"There have been discussions about retraining Indian fishermen with regard to methods of deep sea fishing discussions among fishermen’s cooperative societies on the two sides and other long term solutions. We do need something of a more immediate nature. I would say this is a real flashpoint in the relationship between the two countries it is a constant irritant. And we really do need to find a solution to these. There’s goodwill on both sides, and there is the realisation and the result. To address this matter in earnest and find a solution, I hope my visit will play a constructive role in that regard," he said.