Mujibur Rahman on Covid-19 foreign financing: Right on amount, wrong on use

This fact check interprets the former MP’s statement as referring to the commitment of expendable financing—which is not limited to grants. To evaluate this statement FactCheck reviewed press reports of financing arrangements Sri Lanka has entered into with foreign entities. As of 28 April 2020, LKR 203.4 billion was reported in terms of such arrangements (Exhibit 1).

However, not all of these arrangements can be classified as expendable financing in the manner referred to by the MP. The financing arrangements are made up of: 

1. Grants (LKR 5.4 billion): Expendable for Covid-19 control activities.
2. Loans (LKR 121.0 billion, including a line of credit): Expendable for Covid-19 control activities. 
3. Currency swap (USD 400 million): Not expendable for Covid-19 control activities and makes no change to the Sri Lankan Government’s cash position or its ability to spend money for the control of Covid-19. This currency swap with India was merely an equivalent exchange of LKR for USD. The USD cannot be spent, and the exchange is reversed at the end of the agreed period. 

Consequently, only LKR 126.4 billion (or 62.1%) of the financing arrangements committed by foreign entities is expendable on activities to control Covid-19. Hence, while the former MP is right on the total amount of financing arrangements, he is mistaken in considering the currency swap with India as expendable financing. 
Therefore, we classify his statement as PARTLY TRUE.

*FactCheck’s verdict is based on the most recent information that is publicly accessible. As with every fact check, if new information becomes available, FactCheck will revisit the assessment.

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