Central Bank says discussions underway with RBI for US $ 1bn special bilateral swap

• Secures US $ 400mn swap with RBI under Framework on Currency Swap Arrangement for SAARC countries

The Central Bank (CB) yesterday said it is holding further discussions to secure an additional US $ 1 billion under a special bilateral swap agreement with the Reserve Bank of India (RBI). 

The CB said this after signing an agreement with the RBI for a US $ 400 million swap arrangement on July 24, under the Framework on Currency Swap Arrangement for South Asian Association for Regional Cooperation (SAARC) countries for 

2019-2022. “Under the swap agreement, US $ 400 million will be received by Sri Lanka, initially for a period of three months and will be rolled over twice each with a three-month tenor, subject to agreement on terms and conditions of the existing SAARC Framework,” the CB said.

This arrangement is expected to provide short-term financing to the CB to meet Sri Lanka’s balance of payment requirements amid the challenging external environment created by the COVID-19 pandemic and its economic malaise.

“The intention of the CBSL in entering into this swap agreement was to be able to maintain a sufficient short-term foreign exchange liquidity while preserving the foreign currency reserve position of the country intact,” the CB said.
This swap agreement has the approval of the Cabinet of Ministers, received on the recommendation of the Monetary Board of the CB.

Senior Deputy Governor Dr. P. Nandalal Weerasinghe signed the agreement on behalf of the CB and RBI Regional Director Ajay Kumar signed it on behalf of the RBI.