COLOMBO: Given Sri Lanka's crucial negotiations with the IMF to secure a USD 2.9 billion bridge loan for a bailout to come out of the economic crisis, the two-day visit here beginning on Thursday by External Affairs Minister S Jaishankar is anticipated with great optimism.
His visit comes two days after President Ranil Wickremesinghe said in Parliament on Tuesday that talks with India to restructure Sri Lanka's debt had made a breakthrough and that the talks had been successful.
"We are making efforts to get our economy back on track. We must now convince China and India to accept this debt restructuring. "I am pleased to announce to this House that the discussions are successful," Wickremesinghe, who also holds the finance ministry portfolio, stated. "We are continuing discussions."
His junior minister, Shehan Semasinghe, stated that "good news from India and China" would be forthcoming.
Sri Lankan officials, who are close to planning the visit, stated that the Indian minister's visit was essential for obtaining the IMF facility.
An unidentified official told PTI, "It is hoped that India would express its willingness to restructure its debt in line with the IMF expectations."
Jaishankar will make calls to President Wickremesinghe and Prime Minister Dinesh Gunawardena during the trip. He will also talk to Foreign Minister M.U.M. Ali Sabry about how to strengthen the close partnership between India and Sri Lanka in all areas.
Sri Lanka is in talks with the International Monetary Fund (IMF) to get a bridge loan of USD 2.9 billion. It has been trying to get financial assurances from its major creditors, China, Japan, and India, which are necessary for Colombo to get the bailout package.
India's concerns for its southern neighbor had paradoxically benefited from Sri Lanka's unprecedented economic crisis, given the island nations' proximity to China and their previous economic cooperation.
India provided USD 4 billion in assistance when the crisis first emerged a year ago.
While criticizing the government for its economic mismanagement, the opposition also mocked the anticipated IMF facility, claiming that it would cost less than $3 billion over four years when India had already extended $4 billion in just under six months.
The Indian lifelines—specific credit lines for fuel and essential imports—put an end to the long lines on the island nation for several days.
The island became embroiled in a political upheaval that had never been seen before as a result of public outrage over fuel shortages, fuel shortages, and power outages for extended periods of time. Gotabaya Rajapaksa was ousted as president after months of protests.
Jaishankar was, coincidentally, the first dignitary from outside Sri Lanka to visit during the economic crisis. India's "Neighbourhood First" policy was pretty much in place when he visited Sri Lanka in March of last year, right when the crisis was at its worst.
The Ministry of External Affairs stated in New Delhi on Tuesday, "India has stood with the people of Sri Lanka at all times." Sri Lanka is a close friend and neighbor.
It stated that Jaishankar's visit to Colombo demonstrates the significance that India places on its cordial relationships with Sri Lanka.
According to Dimantha Mathew, an investment analyst, the foreign minister's visit to the IMF facility was crucial. China and India hold the most debt. "Sri Lanka's acceptance into the IMF program depends on their assurances," he stated.
Mathew stated, "Sri Lanka will be able to obtain the facility in its revised timeline if Sri Lanka can get the two largest creditors to fall in line with the IMF programme."
He hoped that the USD 2.9 billion IMF bailout's first tranche would be available immediately after India and China issued the assurances necessary for the facility.
The second tranche, according to Mathew, could be resolved within six to eight months.
In response to reports that India had already provided direct assurances to the IMF, officials in Sri Lanka remained tight-lipped.
Since Jaishankar was said to be looking at the "entire gamut of close India-Sri Lanka partnership and steps to strengthen it in all spheres," neither of them would comment on the Indian minister's brief on other projects in Sri Lanka, such as Indian investments in the country's energy sector.
An official stated, "Minister Jaishankar would be the messenger of good news."
After announcing its first sovereign debt default in April of last year, the cash-strapped nation began negotiating with the IMF for a bailout.
Due to a severe lack of foreign exchange reserves, Sri Lanka experienced an unprecedented financial crisis in 2022, its worst since it gained independence from Britain in 1948. This sparked political unrest and led to the removal of the all-powerful Rajapaksa family.