Sri Lanka will restart negotiations on trade deals with India, China and Thailand after a four-year hiatus, an official said on Thursday, as the crisis-hit country scrambles to seal deals to help it rebuild its economy.
The island of 22 million is in the midst of its worst financial crisis in more than seven decades, sparked by a severe shortage of foreign currency that has left the country struggling to pay for fuel, food and medicine.
Thai officials are scheduled to arrive in Sri Lanka on Monday to start the third round of talks after negotiations were suspended in 2018, said KJ Weerasinghe, Sri Lanka’s chief FTA negotiator.
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Negotiations with India and China, Sri Lanka’s biggest trading partners, which account for about $5 billion each in bilateral trade in 2021, are expected to start in February and March.
“The focus is on enhancing economic cooperation and attracting investment, which is crucial for Sri Lanka to emerge from this economic crisis,” Weerasinghe said. Reuters.
“My main goal is to have all of these deals completed by the end of 2023 or early 2024.”
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Auramon Supthaweethum, director general of Thailand’s Department of Trade Negotiations, said the talks had been delayed due to Sri Lanka’s economic crisis and the covid-19 pandemic.
“We are heading there to continue the discussion,” Supthaweethum said.
Bilateral trade between Thailand and Sri Lanka totaled about $460 million in 2021, according to data from the Sri Lankan central bank.
Sri Lanka is aiming to deepen an existing FTA with its northern neighbor India into an Economic and Technological Agreement after talks stalled in 2018. It is looking to add services and investment to the current deal that mainly covers trade in goods.
FTA discussions with China, the island’s biggest bilateral lender, also stalled in 2018 over disagreements over the pace of liberalization of the Sri Lankan economy, Weerasinghe said.
Both countries have responded positively to the resumption of talks, but specific dates have not yet been finalized, Weerasinghe added.
India’s Ministry of Commerce and China’s Ministry of Foreign Affairs did not immediately respond to Reuters comment requests.
Sri Lanka’s economy is projected to have contracted 8.7 percent in 2022, but a recovery is expected in the second half of 2023, the central bank said.
The country signed a preliminary agreement for a $2.9 billion rescue package with the International Monetary Fund last September, but has to straighten its debt before disbursements can begin.
