Govt. working towards securing up to US$ 700mn through currency swaps, loans

• To borrow US$ 400mn from RBI through currency swap
• In talks with ADB and several others to borrow up to US$ 300mn
• Govt. yet to officially announce negotiations with IMF

The government is working towards securing up to at least US$ 700 million from currency swaps and multilateral lenders within the coming few weeks to cushion the island nation’s foreign reserve buffers and support its budget.
Co-Cabinet spokesperson and Minister Bandula Gunawardana yesterday said Cabinet approval has been given to borrow up to US$ 400 million from the Reserve Bank of India (RBI) through a currency swap to boost the country’s gross reserves.

The swap facility will be valid for a period of three months, according to 
government sources.

They further revealed that the Finance Ministry is currently negotiating with several lenders including the Asian Development Bank and China’s Asian Infrastructure and Investment Bank (AIIB) to borrow at least US$ 300 million.

The government is yet to officially come forward to say whether they are also in talks with the International Monetary Fund (IMF) to borrow funds, despite speculation that the government has already approached the 
multilateral lender.

Economists have said Sri Lanka will need to borrow at least US$ 2.5 to US$ 3 billion from the IMF to navigate the current crisis caused by COVID-19 pandemic.

On average, Sri Lanka has US$ 4 billion per annum to be serviced until 2025.

The country’s foreign reserves currently stand around US$ 7.5 billion. Sri Lanka has US$ 1 billion sovereign bond to be settled in October.