(Reuters) – Sri Lanka and India will sign a pact to link their power grids and start negotiations on an upgraded trade agreement within two months, a Sri Lankan diplomat said on Wednesday (15), as the island nation seeks a way out of its worst economic crisis in decades.India has provided some $4 billion in assistance to its southern neighbour since the crisis hit early last year, but Sri Lanka is now seeking to enhance trade and investments as it moves to close a $2.9 billion loan from the International Monetary Fund, the country's envoy to New Delhi told Reuters."We have to have growth, otherwise basically the economy will shrink," Milinda Moragoda, the Sri Lankan High Commissioner to India said."As far as growth is concerned, India offers that prospect.
So we will have to move on that. Tourism from India, investment from India, integration with India. That's what we have to do."A key part of Sri Lanka's economic recovery plan rests on developing its renewable energy resources in the island's north, from where power can be transported into southern India through a cross-border transmission cable.The two countries resumed talks on linking their electricity grids last year, and Moragoda said a memorandum of understanding on the project would be signed within two months, which will be followed by a feasibility study.First proposed more than a decade ago, the project has made little progress so far.