India says it is committed to boosting investment in crisis-hit Sri Lanka

COLOMBO (Reuters) – India has pledged to boost investments in its debt-ridden neighbor to help Sri Lanka emerge from its worst economic crisis in 70 years, Foreign Minister Subrahmanyam Jaishankar said. said during a visit on Friday.

Over the past year, the island nation of 22 million people has grappled with challenges ranging from currency shortages to runaway inflation to a sharp recession. It is in its worst crisis since independence from Britain in 1948.

During his two-day visit, Jaishankar met with his Sri Lankan counterpart Ali Saburi on Thursday on cooperation in infrastructure, connectivity, energy, industry and health services.

“India will encourage greater investment in Sri Lanka’s economy, especially in core areas such as energy, tourism and infrastructure,” Jaishankar told reporters in the city of Colombo.

“We expect the Sri Lankan government to provide a more business-friendly environment to create a strong pull factor.”

On Friday, he will meet with Sri Lanka’s president and prime minister.

During the visit, the neighbors are also expected to sign a memorandum of understanding for a renewable power project covering three islands in northern Sri Lanka, two power and energy ministry sources said.

Sri Lanka rushes to secure $2.9bn bailout from International Monetary Fund but needs help from both largest bilateral lenders China and India to reach final deal with IMF am.

India strongly backs Sri Lanka’s debt restructuring plan, telling global lenders that Sri Lanka owes about $1 billion to its nearest neighbors.

“Sri Lanka’s creditors strongly felt that positive steps should be taken to facilitate its recovery,” added Mr Jaishankar.

“Instead of waiting for others, India has decided to do what we believe is right, providing financial guarantees to the IMF to pave the way forward for Sri Lanka.”

China is Sri Lanka’s largest bilateral lender and the last major creditor who has yet to agree to the plan.

By the end of last year, Sri Lanka owed $7.4 billion to Chinese lenders, or almost a fifth of its public external debt, according to calculations by the China-Africa Research Initiative.

Additional reporting by Devjot Ghosal, New Delhi, written by Sudipto Ganguly.Editing: Clarence Fernandez, Robert Barthel

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