• CBSL completed currency swap agreement with RBI on July 24, 2020
• Facility was drawn by CBSL on July 31, 2020 for three months 
• Roll-over was given till February 1, 2021 at the request of CBSL  

By Kelum Bandara  

In response to internet media reports about India asking for the settlement of US $ 400 million currency swap as an act of retaliation for the cancellation of the port project, the Indian High Commission said a roll-over facility for the settlement of it had been granted for the Central Bank of Sri Lanka till February 1, and a further extension was impossible without Sri Lanka having successfully negotiated staff level agreement for an IMF programme.  

 A spokesman of the Indian High Commission who commented on such media reports said, “We have seen speculative reports about the US$ 400 million settlement of currency swap facility by Central Bank of Sri Lanka (CBSL). In this respect, it is pointed out that Reserve Bank of India (RBI) and CBSL had concluded a US$ 400 million currency swap agreement on July 24, 2020 under the SAARC Currency Swap Framework. This swap facility was drawn by CBSL on July 31, 2020 for an initial period of three months.”   

He said a three-month roll-over was provided at CBSL’s request till February 1, 2021, and further extension would require Sri Lanka having a successfully negotiated staff level agreement for an IMF programme.  
“Sri Lanka does not have at present. The Central Bank settled the swap facility with the Reserve Bank of India as scheduled and this was clarified by the Central Bank on February 5, 2021,” he said.  

He also said India abides by all of its international and bilateral commitments in letter and spirit.   
Bilateral relations with India hit a new low recently after the Government reneged from a commitment made in 2019 under the previous rule to develop the East Container Terminal of Colombo Port through an equity sharing arrangement. India conveyed its displeasure on this issue formally to the Sri Lankan leaders.

• Bilateral relations with India hit a new low recently after the  Government reneged from a commitment made in 2019 under the previous  rule