India announced it had finalised a US$ 400 million currency swap facility for Sri Lanka under the SAARC framework, and said that Colombo’s request for a bilateral swap facility for US$ 1.1 billion is being considered.
The Reserve Bank of India (RBI) signed documents for giving effect to the currency swap facility for the Central Bank of Sri Lanka on Friday. The arrangement will remain available till November 2022, and the Indian High Commission in Colombo informed senior officials of the Central Bank Sri Lanka government about the decision. Earlier, on July 14, Deputy High Commissioner Vinod K. Jacob had met and discussed the currency swap arrangement with the Governor of the Central Bank of Sri Lanka, Prof. W.D. Lakshman.
This currency swap was extended by India following a request from the Sri Lankan side for the facility under the South Asian Association for Regional Cooperation (SAARC) Currency Swap Framework in order to cope with the impact of the Covid-19 pandemic.
During a phone conversation with Prime Minister Narendra Modi on May 23, President President Gotabaya Rajapaksa had asked the Indian government to provide a special swap facility of US$ 1.1 billion "to top up the $400 million under the Saarc facility."
While the agreement for the currency swap under the Saarc framework has been concluded, the bilateral swap request for US$ 1.1 billion is being considered, reports say.
A statement issued by the Sri Lankan president’s office in May had quoted Rajapaksa as saying the special swap of US$ 1.1 billion "would enormously help Sri Lanka in dealing with our foreign exchange issues."
A statement issued by the Sri Lankan president’s office in May had quoted Rajapaksa as saying the special swap of US$ 1.1 billion "would enormously help Sri Lanka in dealing with our foreign exchange issues."
During his visit to India earlier this year, President Rajapaksa had sought a moratorium on repayment of loans worth almost US$ 1 billion.
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