Bangladesh clears currency swap to boost Sri Lanka’s depleted foreign exchange reserves
Gotabaya Rajapaksa’s one-year request to Narendra Modi for $ 1.1 billion currency swap is pending
Bangladesh on Tuesday authorized a $ 200 million currency exchange facility for Sri Lanka to help boost its economy, becoming the first South Asian country to provide crucial financial assistance to the island nation this year. .
Based in Dhaka The Daily Star The newspaper reported on Wednesday that Bangladesh was extending “a kind of lifeline to the besieged Sri Lankan economy” by offering to top up its depleting foreign exchange reserves. “The board of directors of Bangladesh Bank has decided in principle to lend $ 200-250 million from Bangladesh reserves to Sri Lanka for three months,” said Mohammad Sirajul Islam, spokesperson for Bangladesh Bank, the bank central part of the country. AFP in Dhaka.
With Sri Lanka’s main currency-generating sectors – tourism, clothing exports and tea – being hit hard by the pandemic, the country is struggling to maintain its reserves amid a difficult debt repayment schedule. As of April 2021, Sri Lanka’s foreign exchange reserves stood at $ 4.5 billion, roughly the same amount the country has to pay this year in foreign loan repayments.
So far this year, Colombo has secured financial aid from China, through a $ 1.5 billion currency swap deal, and a $ 500 million loan, on top of that. of the $ 500 million made last year. Sri Lanka also signed a $ 500 million loan agreement with the EXIM Bank of Korea two weeks ago.
India, which extended a Reserve Bank of India’s $ 400 million currency swap facility – it was settled in February 2021 after an extension – has yet to respond to Sri’s request. Lanka of an additional $ 1.1 billion currency swap facility. President Gotabaya Rajapaksa requested it during a telephone conversation with Prime Minister Narendra Modi in May 2020. New Delhi also has yet to approve Prime Minister Mahinda Rajapaksa’s request for a debt moratorium, which he has requested. before the pandemic hits the region.
Meanwhile, Dhaka has allowed the request – discussed during Prime Minister Mahinda Rajapaksa’s visit to the capital in March – brings some relief to Colombo, senior officials said, although the decision has yet to be formalized. in a bilateral agreement. Despite the pandemic, Bangladesh’s foreign exchange reserves hit a record high in April, surpassing the $ 45 billion mark.