COLOMBO, Sri Lanka (AP) - Debt-stricken Sri Lanka has welcomed one of New Zealand's most prominent ministers to explore methods of strengthening bilateral relationships, particularly in trade, tourism, and agriculture sectors. Winston Peters, New Zealand's Deputy Prime Minister and Foreign Affairs Minister, engaged in discussions with Sri Lanka's Foreign Affairs Minister Vijitha Herath in the capital city, Colombo, during his five-day visit, which is set to conclude on Wednesday.
This visit occurs amid Sri Lanka's ongoing struggle to recover from its most severe economic crisis, which began three years ago. Despite these challenges, relations between Sri Lanka and New Zealand have seen significant improvement in recent years. Notable milestones include the establishment of a New Zealand embassy in Colombo in 2021 and a corresponding Sri Lankan embassy in Wellington earlier this year.
The discussions held on Monday were centered on enhancing cooperation in various domains, including trade, investment, agriculture, education, and tourism, as highlighted by Minister Herath. He stated, “We also explored expanding trade links in high-potential sectors such as dairy, processed food, fresh produce, and discussed improving market access for Sri Lankan products.” Herath commended New Zealand's substantial support in developing the dairy industry in Sri Lanka, emphasizing its transformational impact on rural livelihoods.
In recent years, Sri Lanka has initiated efforts to modernize and expand its domestic dairy industry. However, the country still meets only about 40% of its demand for milk and dairy products, necessitating imports to fill the gap. New Zealand has emerged as a critical supplier of these dairy products, particularly milk powder. In 2024, trade figures indicated that New Zealand exported goods worth $335 million to Sri Lanka, with dairy products constituting the majority of these exports.
The trade balance currently favors New Zealand, which imported $64 million in goods from Sri Lanka in 2024, including tea, coffee, apparel, and rubber products. The discussions between Peters and Herath also covered topics such as reducing bureaucratic hurdles at border crossings and strategies to enhance Sri Lanka's market access capabilities.
Peters mentioned, “We discussed the growing number of New Zealand companies working with and investing in Sri Lanka or looking to collaborate with Sri Lankan partners.” He expressed that these partnerships would be beneficial for Sri Lanka's tourism, agriculture, and healthcare sectors.
Sri Lanka declared bankruptcy in April 2022, grappling with over $83 billion in debt, more than half of which is owed to foreign creditors. The country subsequently sought assistance from the International Monetary Fund (IMF), which approved a $2.9 billion, four-year bailout package in 2023, contingent upon Sri Lanka’s commitment to restructuring its debt.
By September of the previous year, Sri Lanka announced the conclusion of its debt restructuring process, highlighting agreements reached with bilateral and multilateral creditors, as well as private bondholders. The nation is currently aiming for $17 billion in debt service relief.
The economic crisis that Sri Lanka has faced has been largely attributed to a combination of mishandling economic policies, the repercussions of the COVID-19 pandemic, and terrorist attacks in 2019 that severely impacted its vital tourism sector. The pandemic also created disruptions in the flow of remittances from Sri Lankans working abroad, further compounding the country’s economic challenges.
