Bangladesh Bank renews validity of SL forex loan by 3 months

Bangladesh Bank (BB) has extended the validity of the credit facility it extended to Sri Lanka by three months after the expiry of the first three-month tenure of the credit facility.

The loan facility has been renewed following a request from the island nation, Dhaka-based New Age reported on Sunday.

BB extended the credit facility amounting to US$ 200 million under a currency swap deal with the Central Bank of Sri Lanka.

Sri Lanka received the loan facility from Bangladesh in three tranches.

BB released US$ 50 million as the first tranche on August 19, 2021. The second tranche amounting to US$ 100 million was released on August 30, 2021 and the final installment worth US$ 50 million was released on September 21, 2021.

As per the agreement, Bangladesh would receive 2 percent plus LIBOR as interest on the credit amount.
If the installment principal remains unpaid even after six months, the applicable interest would be 2.5 percent plus LIBOR.

The currency swap initiative was taken when Prime Minister Mahinda Rajapaksa visited Bangladesh to join the celebrations of the golden jubilee of Bangladesh’s independence.

Bangladesh’s foreign reserves have been steadily rising despite Covid-19, whereas Sri Lanka’s gross foreign reserves plummeted to US$ 1.6 billion by end-November 2021.