Bilateral agreements are becoming more common due to global uncertainties: FM Sitharaman Nirmala

 Bilateral agreements are becoming more common due to global uncertainties: FM Sitharaman Nirmala

Sitharaman emphasized the value of bilateral agreements between nations, saying that Sri Lanka and India need to consider entering into such a deal. She was giving a speech in Colombo at the India-Sri Lanka Business Summit.

On November 1, Finance Minister Nirmala Sitharaman claimed that there is a growing need for regional and bilateral agreements to be made in order to shield national economies from international uncertainty.

"International multilateral accords are now waning. It's not taking place. Talking about multilateral accords is frowned upon. It might come back... There is undoubtedly interest in bilateral agreements and agreements in regional currencies around the globe, Sitharaman said. Everyone is worried about the situation in the Middle East, the crisis in Ukraine, and the potential for a spike in gasoline costs.

Fears that the war between Israel and Hamas may spread to a regional level and disrupt supply have put oil markets on edge recently.

Sitharaman emphasized the significance of bilateral agreements between nations in this context and recommended that India and Sri Lanka take similar economic measures into consideration. She was giving a speech in Colombo at the India-Sri Lanka Business Summit.

"Arrangements to guarantee that there won't be any shocks resulting from currency fluctuations, arrangements to prevent crises caused by foreign exchange, arrangements to guarantee that your food security is guaranteed between the two countries, and arrangements to ensure that your energy won't experience a roller coaster ride." Such a bilateral agreement should also help Sri Lanka and India, the speaker said.

With the Reserve Bank of India (RBI) announcing the establishment of a system to settle global commerce in rupees in July 2022, Indian authorities have been pushing the usage of the rupee abroad over the last year. This technique seems to have been used early on to buy cheap oil from sanction-hit Russia after its invasion of Ukraine in February 2022.

In July, India signed bilateral agreements with Sri Lanka and the United Arab Emirates to settle commerce in local currencies. Talks for settling transactions across borders in local currencies have also started with Saudi Arabia and Indonesia.