SL to receive US$ 250mn B’desh swap in tranches; few other inflows also expected

Sri Lanka is expecting to receive the US$ 250 million swap facility entered into with Bangladesh Bank in multiple tranches starting immediately and a few other inflows during the month of August as part of the stop-gap measures by authorities to rebuild the country’s foreign exchange reserves.

According to Deputy Governor of Central Bank Mahinda Siriwardana, the first tranche of the Bangladesh swap, which is US$ 50 million, was due last week. 

“In fact, we would be getting the first tranche of US$ 50 million this week and another US$ 100 million in five working days and another US$ 50 million in a similar period of time,” he said during a press conference last week. Sri Lanka’s foreign currency reserves fell to US$ 2.8 billion by July end, equivalent to 1.8 months of imports after the government sank into its reserve assets to settle a billion dollar bond maturing on July 27 and other foreign commitments. 

Besides, Sri Lanka also expects to receive its quota of the International Monetary Fund’s (IMF) creation of Special Drawing Rights (SDRs) equivalent to US$ 780 million during August as part of the efforts of the multilateral lender to help assist the nations battling the pandemic.

According to the IMF, the general allocation of SDRs becomes effective on August 23 and the newly created SDRs will be credited to IMF member countries in proportion to their existing quotas in the Fund. 

Further, Sri Lanka is expecting 2.0 billion Renminbi facility equivalent to US$ 308 million from China Development Bank during this month as part of its third and the final tranche of the US$ 1.2 billion approved last year. 
The first two tranches of US$ 500 million each were received in March 2020 and April 2021.

Another US$ 400 million is expected in August from the Reserve Bank of India under the SAARC Finance swap facility as the country qualifies to reapply for the facility after a lapse of 6 months since the settlement of the initial swap in February.  In an earlier statement, Central Bank Governor Professor W.D. Lakshman mentioned about another US$ 1.0 billion special swap facility that was being negotiated with an Indian counterpart. 

The Central Bank expressed confidence that the country would end the year with a US$ 4.0 billion foreign reserve position, which is deemed as a, “relatively comfortable level” of foreign exchange, considering the tremendous headwinds the country was facing with the loss of key inflows due to the pandemic.