Sri Lanka and Indonesia Forge Trade Agreement to Bolster Economic Recovery

Sri Lanka's cabinet has approved a trade agreement with Indonesia, aiming to revive its economy after a severe foreign exchange crisis in 2022. The agreement, pending finalization in December, involves two-way trade worth $424 million. Sri Lanka is also in discussions with several other countries for similar deals.

Sri Lanka's cabinet has given the green light to sign a trade agreement with Indonesia in March, a significant step towards revitalizing its crisis-stricken economy. The nation faced a severe foreign exchange crunch in 2022.

Cabinet spokesperson and Transport Minister Bandula Gunawardana announced that ongoing talks about the agreement, which began earlier this year, will conclude in December. 'Expanding trade ties with other countries is essential to promoting Sri Lanka's growth and helping it recover from the crisis,' Gunawardana asserted during a weekly cabinet briefing.

Bolstered by a $2.9 billion International Monetary Fund program, Sri Lanka is anticipated to achieve 3% economic growth this year, rebounding from a 2.3% contraction last year and a 7.3% economic shrink in 2022. In addition to the Indonesia deal, Sri Lanka signed a free trade agreement with Thailand and is in talks with Malaysia, India, and Vietnam for new trade deals.

Data from Sri Lanka's Export Development Board reveals that two-way trade between Sri Lanka and Indonesia was valued at around $424 million in 2023. The primary exports from Sri Lanka to Indonesia include knitted fabrics and chemical products, while imports consist mainly of coconut oil, tobacco, and paper.

(With inputs from agencies.)