The Central Bank yesterday said it is discussion with the Reserve Bank of India (RBI) to secure an additional $ 1 billion, under a Special Bilateral Swap Agreement.
This is following CBSL entering into a $ 400 million bilateral currency SWAP agreement with the RBI on Friday to bolster reserves and meet the country’s balance of payments requirements.
The deal was under the Framework on Currency Swap Arrangement for South Asian Association for Regional Cooperation (SAARC) countries for 2019 – 2022.
CBSL said in a statement this would provide short-term financing to the CBSL to meet the country’s balance of payment requirements.
The intention of the CBSL in entering into this SWAP agreement was to be able to maintain a sufficient short-term foreign exchange liquidity while preserving the foreign currency reserve position of the country intact. The challenging external economic environment of Sri Lanka today is the result largely of this COVID-19 pandemic. This SWAP agreement has the approval of the Cabinet of Ministers, received on the recommendation of the Monetary Board of the Central Bank of Sri Lanka.
Under the SWAP agreement, $ 400 million will be received by Sri Lanka, initially for a period of three months, and will be rolled over twice each with a three months tenor, subject to agreement on terms and conditions of the existing SAARC Framework.
Central Bank of Sri Lanka Senior Deputy Governor Dr. Nandalal Weerasinghe signed the agreement on behalf of the Central Bank of Sri Lanka and Reserve Bank of India Regional Director Ajay Kumar signed it on behalf of the Reserve Bank of India.