Sri Lanka aims to implement a free trade agreement with China in order to gain an access to the market of 1.3bn people, the country’s state investment agency said yesterday.
Both countries recognised the benefits that can be leveraged through the positive relationship between trade and investment, the Board of Investments (BoI) said in a statement, Xinhua news agency reported.
The BoI said that the Sri Lankan government also informed China that it was accelerating the implementation of ongoing Chinese project in the island nation and aimed to attract more Chinese tourists to visit Sri Lanka.
“Both sides recognised that China’s Going Abroad strategy and Sri Lanka’s very favourable location on the Maritime Silk Road provided a strong basis for strengthening Sino-Lanka economic relations,” the BoI said.
It added that Colombo also paid its gratitude for Beijing’s support during the country’s 30-year civil conflict as well as assistance for infrastructure
development.
China has been Sri Lanka’s biggest contributor of foreign direct investments. Nearly, 70% of the infrastructure projects in the country have been funded by China and built by Chinese companies.
Sri Lanka already has preferential trade agreements with India and Pakistan.
Sri Lanka is currently in talks with the IMF for a bailout, although the sum it is seeking has not been disclosed.
The IMF, which sent a mission to review Sri Lanka’s economy earlier in February, said it had warned the authorities they should make a “stronger effort” immediately to reduce the deficit.
The government went on a spending spree after taking power in January 2015, to deliver on election promises of higher wages and lower prices.
But this has increased the budget deficit and caused concern over the balance of payments.
The island last week received pledges of over $2bn in loans and equity from the Asian Development Bank to be spread over three years.