SL looking to tackle trade deficit with India: Cabraal

• Discussions to be held between SL and India on $ 400 m swap facility and extensions
• Says discussion did not cover specific projects
• Rambukwella clarifies $ 15 m grant not for fulfilment of 13A
• Fishing issues expected to be settled soon

On top of discussions for a $ 400 million swap facility, Sri Lanka will also look at ways to reduce a significant trade deficit with India, Money and Capital Market and State Enterprise Reforms State Minister Ajith Nivard Cabraal said yesterday.

Addressing the press to make clarifications about the virtual bilateral summit between Prime Minister Mahinda Rajapaksa and Indian Prime Minister Narendra Modi on Saturday, Cabraal said it was brought to the Indian Prime Minister’s attention that there was a deficit in the balance of trade between the two countries that should be addressed at some point.

Considering the economic hardships faced by Sri Lanka during the COVID-19 pandemic, the Reserve Bank of India, in July, signed a $400 million currency swap facility with the Central Bank of Sri Lanka. The arrangement will be available until November 2022.

It is also estimated that Sri Lanka owes India $ 960 million.

“Going forward, we are looking at ways and means in which the trade imbalance could also be addressed,” he said, explaining that Sri Lanka’s exports to India are of a lesser value than India’s exports to Sri Lanka.

Rajapaksa and Modi had a discussion on overall collaboration between the two countries and future transactions between Sri Lanka and India, but did not discuss specific projects, Cabraal said. In response to a question, he added that the discussion did not touch on the Government’s request in February for a three-year moratorium on all loan repayments from India or President Gotabaya Rajapaksa’s request for a currency swap arrangement of up to $ 1.1 billion in May.

However, the India - Sri Lanka Joint Statement on Virtual Bilateral Summit published by the External Affairs Ministry of India states: “An additional request for a bilateral currency swap arrangement worth around $ 1 billion by the Sri Lankan side remains under discussion. Technical discussions on Sri Lanka’s request for debt deferment are going on.”

Cabinet Spokesman and Mass Media Minister Keheliya Rambukwella also addressed aspects of the discussion between Rajapaksa and Modi, stating that the discussion covered a range of topics, including COVID-19 response, economic vision, and peace and reconciliation.

He clarified that the grant of $ 15 million from India was for the fostering of Buddhism as well as cultural activities in Sri Lanka and was in no way connected to the fulfilment of the 13th Amendment to the Constitution.

Rambukwella read an excerpt from the discussion where Prime Minister Rajapaksa assured a safe and supportive environment will be created for all ethnic groups.

According to the India-Sri Lanka Joint Statement on Virtual Bilateral Summit, Modi called on the Government of Sri lanka to address the aspirations of the Tamil people for equality, justice, peace and respect within a united Sri Lanka. This included carrying forward the process of reconciliation with the implementation of the 13th Amendment to the Constitution of Sri Lanka.

“Prime Minister Mahinda Rajapaksa expressed the confidence that Sri Lanka will work towards realising the expectations of all ethnic groups, including Tamils, by achieving reconciliation nurtured as per the mandate of the people of Sri Lanka and implementation of the Constitutional provisions,” the statement added.

The summit also focused on the ongoing fishing-related issues faced by the countries and the Government was confident negotiations will reach a settlement soon. While Rambukwella said the matter cannot be resolved by force as it may impact the cordial relationship between Sri Lanka and India, he assured that the committee appointed to settle the matter would find a way of restarting the discussions that were halted due to the COVID-19 pandemic.