After all the accusations and uncertainties, much awaited assurances from China and India came this week and a jubilant President Wickremesinghe announced in Parliament on Tuesday that ongoing discussions for economic recovery were successful. “Currently, we are working to get our economy on the right track. Now we have to get India and China to consent to this debt restructuring”.
Two Asian giants gave the green light to debt restructuring plans to bail out Sri Lanka from the unprecedented economic crisis. This week, top level visitors from India and China met Sri Lankan leaders separately to give ‘good news’ that they would favourably deal with Sri Lanka’s request for loan payment readjustments so that the country could finalise the deal with the International Monetary Fund (IMF) for the five year assistance programme that would guarantee a loan facility of US$ 2.9 billion.
First to visit was China’s Communist Party (CPC) International Department Head, Vice Minister Chen Zhou who met President Ranil Wickremesinghe and Prime Minister Dinesh Gunawardena earlier this week.
Chen Zhou met Prime Minister Gunawardena on Monday. When responding to China's support to Sri Lanka's debt restructuring, he assured the Prime Minister, “Several Ministries and financial institutes of China are working closely on this issue for quite a long period. I'm confident that Sri Lanka will have good news very soon”.
Two days later External Affairs Minister Subramniam Jaishankar arrived in Colombo for a mission to focus on supporting Sri Lanka to deal with the current economic crisis. He is scheduled to discuss currency swap arrangements as well as restructuring Sri Lanka’s debt in addition to bilateral cooperation in the field of energy security and food security.
“India is expected to give a positive response to Sri Lanka’s requirements, in keeping with India’s support last year as well,” the Indian media said quoting official sources in New Delhi. India’s combined package of about US$ 4 billion including loans, Credit Lines for the purchase of essentials and a loan deferment through the Asian Clearing Union is to be announced. Two Memorandums of Understanding (MoUs) on the Trincomalee development project and the long-pending plan for a cross-strait transmission line that would allow Sri Lanka access to India’s plans for an energy grid along with other countries like Nepal, Bhutan and Bangladesh are scheduled to be signed.
The positive signals from New Delhi and Beijing came after weeks of uncertainties as the two economic giants of Asia were watching each other’s moves before making a commitment.
The Government approached the IMF immediately after Ranil Wickremesinghe took oaths in July 2022 and the plan was to obtain IMF support before the end of the year. Although the official talks with IMF were concluded satisfactorily, the IMF Board of Directors could not decide on the package at its meeting in December in Washington as the bilateral creditors failed to conclude their agreement, which was one of the major preconditions. Sri Lanka’s negotiations with creditors dragged on at two fronts. While Japan discussed the issue with China and India, the lending countries in the West sat under the Paris Club to decide on their loans to Sri Lanka.
Chinese and Indian loans came under spotlight and the delays resulted in verbal onslaughts and heavy criticism from not only lending countries accusing each other but also from the international actors.
US Ambassador Julie Chang publicly asked China not to be the spoiler in Sri Lanka’s debt restructuring process and an infuriated Chinese Embassy spokesman accused the U.S. Envoy of hypocrisy. China also pointed out private creditors from Western countries hold about 40 per cent of Sri Lanka’s debt, while China’s share is only a single digit percentage.
However, after all those accusations and uncertainties, much awaited assurances from China and India came this week and a jubilant President Wickremesinghe announced in Parliament on Tuesday that ongoing discussions for economic recovery were successful. “Currently, we are working to get our economy on the right track. Now we have to get India and China to consent to this debt restructuring. We are continuing discussions in that regard and I am pleased to announce to this House that the discussions are currently successful.”
The President made use of this occasion to repeat his earlier invitation to all Opposition MPs to join hands through a new political system to provide relief to the people.
As President Wickremesinghe and Prime Minister Gunawardena repeatedly stressed despite the difficult economic background in the country, the Government is working to provide relief to the people. Due to the prudent agricultural policies of the Government, the country has seen a bountiful paddy harvest and the Government has commenced a programme to provide two million low-income families with 10 kilograms of rice per month over a period of two months.
“We won’t get the income we expect all at once. We hope to put all this together and carry out this work. Paying salaries is one of our main functions. Second is the payment of pensions. We should also provide the Samurdhi. Similarly, two more new programmes will be implemented and we have to provide money for that too,” the President said.
President Wickremesinghe outlined some future plans during his speech in Parliament. They include a proposal to establish an economic and trade institution similar to those in many different countries. In addition, for the first time in Sri Lanka it has been planned to set up an institution for women and gender. Measures will also be taken to establish a university for training the officials on Government and State Policies.
Another important proposal is to establish an Agricultural Technology University to create the skilled agriculture resource base essential to modernize our agriculture. There is also a plan to establish a University on Climate Change to which foreign countries have already expressed their willingness to assist. The Government also hopes to establish a Sports University to train this country’s athletes to international standards.
As the President explained, the Government needs funds for these activities. These may cost more than Rs. 10 billion. We are implementing these programmes for the future, the President said.
Under the proposed reforms the country will have an advanced regulations system. Sri Lanka would become one with the best environmental laws in the region with the passage of the laws for marine resources exploration and management and the Muthurajawela (Conservation) Act. The future generations are demanding to protect the resources for them by strict environmental regulations.
The Government also plans to introduce a Social Justice Commission Act. In addition to those programmes, allocations will be made for establishing 75 urban forests this year and the National Youth Platform project programmes. It has been proposed to implement large-scale housing projects for low-income earners in the Colombo District and Gampaha Districts.
“Despite the existing economic crisis in the country, we are working hard to provide relief to the people. On this 75th Independence anniversary, I propose to the Opposition to change the existing political system. Let’s work together to provide relief to the people. If we could achieve such progress with these limited resources, I urge everyone to work together for the future of the country,” President Wickremesinghe appealed in conclusion.
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