Colombo must service over $7 billion outstanding debt in 2022, including bond repayments of $500 million in January and $1 billion in July.
India - Sri LankaIndia confirmed a $400 million currency swap with Sri Lanka while deferring another $500 million due for settlement to the Asian Clearing Union (ACU), in a move aimed at helping the island nation witnessing an unprecedented economic crisis.
In July 2020, the RBI extended a similar swap facility - of $400 million - to help Sri Lanka cope with the impact of the first wave of the pandemic.
Trincomalee oil tank dealSri Lanka announced its decision to sign three lease agreements on developing the strategic Trincomalee oil tank farm with India.
The Trincomalee oil tank farm project, pertains to some 100 oil storage tanks - built by the British during World War II - in Sri Lanka's eastern Trincomalee district.
It has dominated bilateral talks for decades, from the time of the Indo-Lanka Accord of 1987, but has seen little progress.
After it was set up in 2003, Lanka IOC obtained a 35 year lease to develop the 850 acre tank farm in Trincomalee for an annual payment of $1,00,000.
As per the new deal, 14 of the 99 tanks currently operated by Indian Oil Corporation subsidiary Lanka IOC will be leased to the company for 50 years.
In addition 61 out of 99 tanks would be run under the joint venture company formed between the state oil entity, Ceylon Petroleum Corporation (CPC) and the Lanka IOCwith LIOC holding the 49 per cent stake.
Sri Lanka has shut its only refinery for its inability to pay for crude oil and was negotiating a credit line with India for fuel purchases.
Refurbishing each tank is expected to cost at least USD 100 million.
India ranks third in the world in oil consumption, and it is predicted that India's requirement will increase 50 percent by the year 2030.
China - Sri LankaChinese Foreign Minister Wang Yi was on a brief official visit as part of a five-nation tour in the New Year to launch celebrations marking the 70th anniversary of the historic Rubber-Rice Pact and the 65th anniversary of establishment of diplomatic relations.
Under the Rubber-Rice Pact, China needed to import rubber and other supplies and Sri Lanka, for whom rubber was a key export. Srilanka was facing a rise in the price of rice and a slump in the price of rubber.
China is the largest bilateral creditor to Srilanka - it relies on Chinese credit to address its foreign debt burden.
China has invested about USD 12 billion in Sri Lanka's infrastructure projects between 2006-19.
China has formal control over Sri Lanka's Hambantota port as a part of a 99-year lease.
Sri Lanka has decided to establish a Special Economic Zone around the Colombo port city and a new economic commission, to be funded by China.
Leasing of Hambantota and the Colombo Port City project makes it almost certain for the Chinese navy to have a permanent presence in the Indian Ocean which will be worrisome for India's national security.
At a meeting, Wang Yi proposed a forum for Indian Ocean island nations, similar to PM Modi's SAGAR (Security and Growth for All in the Region) initiative.
Security and Growth for All in the Region (SAGAR) was launched in 2015. It is India's strategic vision for the Indian Ocean Region (IOR).
Colombo is in talks with Beijing for a new loan, in addition to the $500 million loan and $1.5 billion currency swap extended by Beijing as pandemic-time support.
Sri Lanka owes China over $5 billion already, and Colombo has requested Beijing to restructure it to provide some relief.