The need for Global Cooperation | Sunday Observer

The need for Global Cooperation

Indian Prime Minister Narendra Modi took two very important telephone calls over the course of last week. Both were to Sri Lanka – one to President Gotabaya Rajapaksa and the other, to Prime Minister Mahinda Rajapaksa. The call to the President was primarily on the two countries’ Covid-19 situation while the call to the Prime Minister was mainly to congratulate him on completing 50 years of Parliamentary politics.

But the essence of both calls was the same – cooperation to eradicate the threat of the devastating Coronavirus pandemic and assistance to develop Sri Lanka’s economy post-Coronavirus. Sri Lanka had earlier requested a US$ 400 million currency swap with the Reserve Bank of India (RBI), to which India had responded positively. Later, the President during the phone call had raised the possibility of India extending another US$ 1.1 billion swap on top of the earlier facility. The Indian Prime Minister, who has initiated a separate Covid-19 SAARC Fund to which Sri Lanka also contributed, has responded to the effect that India was prepared to help Sri Lanka in every possible way to tide over the present crisis. India has also flown in four consignments of medical equipment and medicine needed for the battle against the Coronavirus.

In an interview with an Indian TV station on the Golden Jubilee of his political career, Prime Minister Mahinda Rajapaksa made a very pertinent observation. He noted that Sri Lanka considered both India and China as close friends in both fair and foul weather. Indeed, China has already agreed to extend a US$ 500 million facility and sent several consignments of PPE and other medical goods for the Coronavirus fight. The ready assistance provided by both countries proves the importance of diplomatic links that have been strengthened by President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa since November 2019.

This narrative highlights the importance of South-South Cooperation in international affairs, a factor which is often overlooked as many countries strive to depend solely on the West for their economic needs. As both the President and the Prime Minister have pointed out recently, the SAARC and Non-Aligned Movement (NAM) can be a catalyst for greater South-South Cooperation on a variety of issues including the present health crisis. President Gotabaya Rajapaksa recently addressed virtual summits of both these well-established organisations, which can be revitalised to address the myriad of issues faced by the developing world.

Much of the developing world is deeply in debt to the rich countries and multilateral lending agencies. While many countries including Sri Lanka had kept up to date with their debt repayments, the Coronavirus pandemic has exacerbated their already dire economic conditions.

It is in this context that President Gotabaya Rajapaksa on Thursday called for unconditional support from bilateral and multilateral lenders for developing countries especially those that have not defaulted on their debt in the past, during an international virtual meeting on post-Covid-19 financing organised by Prime Ministers of Canada and Jamaica and the UN Secretary General.

“As this is a crisis beyond the control of Government and business, international support by way of unconditional budget support and compensatory debt deferment facilities for official debt will have to come from multilateral and bilateral official lenders so that private debt and equity markets will not lose confidence,” President Rajapaksa had told this virtual meeting.

“The multilateral and bilateral official creditors to developing countries have a special responsibility to be innovative in creating such space for the developing world to revive their economies and should not insist on normal conditionalities of lending, after all, most countries have honoured their debt obligations and time has come to provide new space by official creditors,” the President said. President Rajapaksa said he had already spoken to Chinese President Xi Jinping, Indian Prime Minister Modi and US National Security Advisor Robert O’Brien on this matter.

“The profiling of official debt and medium term emergency budget support loans by each major bilateral and multilateral lenders will not only provide macroeconomic space to meet private debt obligations and relax trade and payments systems but also restore confidence among private sector creditors to re-energise growth and investments,” the President said.

Countries such as Sri Lanka face another hurdle as they do not qualify for many grant aid and debt relief programs after being classified as Middle Income Countries. In fact, President Gotabaya Rajapaksa alluded to this conundrum in his address: “It is noted that Middle Income Countries (MICs) seem to get subsumed under the overarching classification of developing countries and thereby their requirements are not wholly met.”

It is time that a healthy dialogue took place among MICs and lending agencies and countries so that a mechanism can be evolved to explore the possibility of granting debt relief to these nations as well at least until they address the immediate fiscal concerns in the wake of Covid-19.

The pandemic is a global issue that needs global solutions. No country has been immune from the virus, in more ways than one. Thus a collective response is necessary for everything from vaccine development to economic emancipation. It was reported on Friday that more than 500 scientists from around the world have banded together to develop and fast-track a viable vaccine for the dreaded Covid-19. We hope that the Sri Lankan medical and scientific fraternity too will join these efforts, wherever in the world they are. Such global cooperation is the only way to defeat this unseen and deadly enemy in our midst.