B’desh swap second tranche in November
- First tranche of $ 150 m received last week
By Yakuta Dawood
The pending $ 100 million out of a $ 250 million swap deal, which the Central Bank of Sri Lanka (CBSL) entered into with the Bangladesh Bank (its Central Bank), is expected to be received during the month of November this year, The Sunday Morning Business learns.
If received, it would be the second and last tranche of the said swap deal.
Speaking to us, CBSL Governor Prof. W.D. Lakshman stated that with the first and initial tranche of $ 150 million being transferred merely a few days ago, the remaining amount of $ 100 million would take another two months to roll out.
The foreign currency swap facility from the Bangladesh Bank, totalling $ 250 million, was agreed upon in June 2021, in view of strengthening economic and financial co-operation between the two countries. This swap facility has been provided for a period of three months with the possibility of rolling over twice for similar periods.
All attempts to contact Treasury Secretary S.R. Attygalle and State Minister of Money, Capital Market, and State Enterprise Reforms Ajith Nivard Cabraal proved futile.
Meanwhile, CBSL last week received an equivalent of $ 787 million under the Special Drawing Rights (SDR) allocation from the International Monetary Fund (IMF), thereby providing additional liquidity to the economy at a time of an unprecedented crisis due to the ongoing Covid-19 pandemic.
“Countries can use the space provided by the SDR allocation to support their economies and step up their fight against the adverse effects caused by the pandemic. The IMF SDR allocation is not a loan from the IMF, and no specific conditionalities are attached to the allocation. Previously, the IMF had allocated SDRs to member countries in 2009, 1979-81, and 1970-72,” CBSL mentioned in its press release dated 31 August.
Additionally, the Government of Sri Lanka also expects to receive the remainder of the syndicated loan from China Development Bank (CDB) soon, which will complete the total syndicated loan agreement of $ 1.3 billion between the two countries.
Similarly, Sri Lanka is also expecting to receive $ 400 million from the South Asian Association for Regional Co-operation (SAARC) facility and another special swap facility of $ 1 billion from India in the near future.
Speaking to The Sunday Morning Business in August, Cabraal stated that these facilities should materialise in the short term, adding that they, however, normally do not give an exact date. “Anyway, there is absolutely no risk of a shortage to pay maturing forex loans and interests,” Cabraal assured on a further note.
Commenting with regard to the inflows scheduled to be received by Sri Lanka over the next few months, CBSL noted: “These foreign exchange receipts help improve the country’s gross official reserves while enabling the Central Bank to further facilitate the liquidity conditions in the domestic foreign exchange market. With the materialisation of envisaged inflows, including non-debt-creating foreign currency inflows to the Government, Sri Lanka’s foreign exchange reserves are expected to improve further in the period ahead.”
According to Fitch Ratings, Sri Lanka is liable to settle $ 29 billion in loans between now and 2026, including the recent $ 1 billion ISB settlement.