RBI signs documents to extend $400 mn currency swap facility to Sri Lanka

The Reserve Bank of India has signed necessary documents for extending a $400 million currency swap facility to Sri Lanka to boost the island nation's draining foreign exchange reserves due to the coronavirus pandemic, the Indian High Commission here said on Saturday.

The currency swap arrangement will remain available till November 2022, the Indian mission said in a press release.

Sri Lanka in April said it was set to enter into an agreement with the RBI for a currency swap worth $400 million under the South Asian Association for Regional Cooperation (SAARC) framework to boost the foreign reserves and ensure financial stability of the country which is badly hit by the Covid-19 pandemic.

In May, President Gotabaya Rajapaksa made an additional request to India for a special $1.1 billion currency swap facility.

"Breaking Good News! Reserve Bank of India signs document for $400 million currency swap facility to #SriLanka till Nov 2022," the Indian mission tweeted on Friday.

"After debt repayment rescheduling discussions yesterday, this development is another example of India's strong commitment to work with #lka in post #Covid19SL economic recovery," it said.

The High Commission has conveyed this information to senior officials in the Government of Sri Lanka and the Central Bank of Sri Lanka, the statement said.

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, it said.

The two countries also held technical discussion on rescheduling of bilateral debt repayment by Sri Lanka on July 22.

An Indian delegation comprising senior officials from the Ministry of External Affairs, Ministry of Finance, and the EXIM Bank interacted with representatives from the Department of External Resources of Sri Lanka through a video conference.

"The High Commission has remained closely engaged in fruitful bilateral cooperation with Sri Lanka on all matters of mutual interest. It would be recalled that on July 22, the High Commission facilitated constructive technical discussions on rescheduling of bilateral debt repayment by Sri Lanka," the statement said.

The meeting was a sequel to telephonic conversations between Prime Minister Narendra Modi and Sri Lankan President Gotabaya Rajapaksa on May 23 and with Prime Minister Mahinda Rajapaksa on May 27.

The next round of technical discussions between the two sides on rescheduling of debt repayment is expected to be held soon.

"These positive developments illustrate active implementation of the leadership-level commitment to work together for addressing the challenges arising from the Covid-19 pandemic, and further the mutually beneficial India-Sri Lanka partnership, including in the economic domain," the statement said.