ECONOMYNEXT – Sri Lanka’s cabinet spokesman Bandula Gunawardena vows a dragged free trade agreement (FTA) with China as a way out of the ongoing unprecedented economic crisis that has begun to plague millions of islanders. supported.
Five years after FTA negotiations with Beijing were suspended over concerns about China’s dominance, Sri Lanka is pursuing multiple free trade agreements involving China and Singapore.
Asked about the progress of FTA negotiations with China at the weekly ministerial press conference on Tuesday (3rd), Foreign Minister Gunawardena said: I can mention it,” he said.
“If we don’t sign the agreement, as a result, our producers won’t be able to compete with other countries when they get their goods at lower taxes,” he said.
“We currently have about $12 billion in exports, but we need to increase it to about $20 billion to $25 billion to be able to overcome this crisis.”
Sri Lanka is embroiled in a geopolitical cold war between China and India with US backing, analysts say. This Cold War has made Sri Lanka very cautious in dealing with Asian powers, even abandoning some investment opportunities.
But the economic crisis and sovereign default have forced the island nation to consider all available means to ensure a larger influx of foreigners out of the crisis.
Sri Lanka had to temporarily suspend FTA negotiations with China in 2018 under the previous administration. That’s because Beijing didn’t agree to Colombo’s demands for a review of the agreement after her ten years.
“The solution to this (crisis) is to improve foreign exchange earnings, stop foreign exchange from flowing out of the country and increase the number of foreign exchange reserves held,” Gnawardena said.
“There are risks in unloading essentials such as fuel, chemical fertilizers, raw materials to run factories, medicines and other machinery. Debt restructuring and debt service plans need to be implemented.”
“Like it or not, we need to sign as many free trade agreements as possible to enter foreign markets as quickly as possible and increase export earnings.” (Colombo/Jan03/2023)