Sri Lanka given six more months to repay Bangladesh’s $200 million loan

Bangladesh Bank today granted Sri Lanka six more months to repay the $200 million loan after the Island nation requested to extend the repayment period due to its prolonged economic crisis.

A senior official of the central bank, on condition of anonymity, said the board of directors of Bangladesh Bank has extended the repayment tenure.

The Island nation, which has been facing an acute greenback shortage for months, borrowed $200 million from Bangladesh in May 2021.

The country was scheduled to repay the loans by April last year, but it failed to do so.

In April last year, Sri Lanka announced defaulting on its entire $51 billion of external debt.

As per the agreement between the two countries, Sri Lanka was supposed to repay the loan by March.

But the Island nation is still facing an acute shortage of foreign exchange reserves, which has compelled it to request BB to extend the repayment period.

BB has extended the deadline at a time when its foreign exchange reserves are depleting at a faster pace.

As per the new deadline, Sri Lanka will have to repay the loan by September this year.

Bangladesh has already sought credit support from several multilateral lender agencies, including the International Monetary Fund.

The reserves of Bangladesh stood at $32.52 billion on January 11 in contrast to $44.92 billion in the same period a year ago, according to data from the central bank.