Sri Lanka survived 2 tough years of economic crisis, possibly with India’s support: President Wickremesinghe

Colombo: Sri Lanka has survived two difficult years of its economic crisis and it was possible because of the financial support of $3.5 billion from India, President Ranil Wickremesinghe said on Saturday and emphasised his commitment to maintain a strong partnership with New Delhi.

Addressing the 31st All India Partners Meet in Colombo from June 20-22, Wickremesinghe said that he during his last visit to India to attend the new government’s swearing-in discussed with Indian Prime Minister Narendra Modi the core areas of partnership.

“Having now survived two difficult years, I must acknowledge that this was possible because India gave us a loan of $3.5 billion. All that will be repaid,” he said.

Wickremesinghe said that sustainable energy is one of the grave areas that the two nations would be jointly working on.

“When I was in Delhi last week, I discussed with Prime Minister Modi the need to accelerate the joint programme that we have decided, agreed on. So the major ones are identified. Now this will show the new path we are taking, and a number of projects, all will be in one parcel,” he said.

He added that Sri Lanka had discussed a fair number of proposals.

“First is the grid interconnection between Sri Lanka and India, so that sustainable energy can be transmitted to India, where you all need that very badly. We have the Sampur solar power project, which is a Government to Government (G2G) project, and a three-island project, which is where we hope the groundbreaking can take place in July,” he said.

Wickremesinghe added that additionally there is a focus on a project to establish land connectivity between Sri Lanka and India.

“Extensive discussions have also taken place regarding expediting the Trincomalee Development Project, which encompasses industrial investment zones and tourist areas. Furthermore, plans are underway to construct a multi-product oil pipeline from Nagapattinam to Trincomalee, pending the final observation report,” he said.

Wickremesinghe also mentioned the directors meeting of the International Monetary Fund, the global lender which is helping the island nation come out of the economic crisis.

“We have just concluded the board of directors meeting of the IMF, which was quite successful and are preparing thereafter to meet with our creditor nations, the Paris Club, India and others, who meet at the official creditors committee next week, and also carrying on discussions with China with the Exim Bank of China,” he said.

“I hope by next week, or thereafter, that we will have come out of this phase of bankruptcy and into the next phase as we go ahead,” he said.

The island nation, in April 2022, declared its first-ever sovereign default since gaining independence from Britain in 1948. The unprecedented financial crisis led President Wickremesinghe's predecessor Gotabaya Rajapaksa to quit office in 2022.

Earlier in May, Foreign Minister Ali Sabry had said Sri Lanka is looking at a reduction of approximately $17 billion from its overall debt burden in the ongoing debt restructuring process.

In March, the International Monetary Fund (IMF) said it has reached a staff-level agreement with Sri Lanka for the next phase that would enable it access to $337 million from the nearly $3 billion bailout approved in 2023 for the cash-strapped country.

Two tranches of $330 million each were released in March and December 2023 even as the Washington-based global lender has praised Colombo for its macroeconomic policy reforms, which it said, “are starting to bear fruit.”