23 April 2022 01:30 am Views - 207
Sri Lanka yesterday received the much-required breathing space in managing its foreign reserves with neighbouring giant India continuing to lend a helping hand to help brave through the worst economic crisis faced since independence.
India offered support yet again by extending the duration of the US $ 400 million currency swap facility.
The Indian High Commission in Colombo yesterday took to Twitter to share the newest support extended to the island nation to help ease its economic burden.
“India’s unstinted and multi-faceted support to Sri Lanka continued. As ongoing currency support, the Reserve Bank of India has extended the duration of the US $ 400 million currency swap for the Central Bank of Sri Lanka, which was concluded in January this year,” the Indian High Commission in Colombo tweeted. The extension of an international debt instrument offered by India is the first to be received by Sri Lanka after the Finance Ministry announced on April 12 the suspension of debt servicing.
The RBI signed the currency swap agreement with the Central Bank of Sri Lanka under the SAARC Currency Swap Framework 2019 to 2022. The agreement was to provide short-term financing to the CBSL to meet the country’s balance of payment requirements.
Under the agreement, the Central Bank can make withdrawals of US dollar, euro or Indian rupee in multiple tranches up to a maximum of US $ 400 million or its equivalent.
Sri Lanka announced a default until it is able to firm up with the International Monetary Fund (IMF) a bailout package.
While Sri Lanka had also drawn on Indian credit lines amounting to US $ 1 billion for essential imports, in addition to other lines for the importation of fuel, the Indian Finance Ministry made a representation to the IMF on behalf of Sri Lanka for a Rapid Financing Instrument (RFI).
So far Sri Lanka has received financial assistance worth more than US $ 1.5 billion.
During the meeting with Finance Minister Ali Sabry in Washington DC, Finance Minister of India Nirmala Sitharaman also affirmed that support will be offered to Sri Lanka with the IMF, especially on the special request made for expediting an Extended Fund Facility (EFF).