Sri Lanka to decide on US$ 1.5 billion swap with the People’s Bank of China
Officials of the Central Bank of Sri Lanka have reportedly said the decision on a US$ 1.5 billion swap with the People’s Bank of China will be notified within the next week or two while talks for a US$ 1 billion swap with the Reserve Bank of India were also proceeding.
Negotiations with the People’s Bank of China have reached the final stage with a decision already made by China Central Bank, the Daily FT has reported.
The decision is expected to be conveyed to the Sri Lanka Central Bank within the next two weeks, Deputy Governor Dhammika Nanayakkara has told reporters during an online press conference recently.
“They have indicated that their internal discussions are almost over and we will be informed shortly,” Nanayakkara has said.
Deputy Governor K. M. K. Siriwardene has added that negotiations with the Reserve Bank of India, which also began last year, have also been progressing.
“To my knowledge they need to get some approvals from India’s Finance Ministry,” Siriwardene has said, indicating that the approval process may be longer. In early 2020 the RBI approved a US$ 400 million swap and subsequently negotiations were started on a separate US$ 1 billion swap.
Governor Prof. W.D. Lakshman has told reporters that the government of Sri Lanka had also not held any discussions with the International Monetary Fund (IMF) on signing up for its Rapid Financing Instrument, which assists countries facing balance of payments crises.
“The Government is focused on self-reliance in dealing with its economic needs and will engage with institutions, organisations and countries willing to help on a non-interventionist policy,” he has said, adding that focus was also on keeping foreign debt contained where possible.
Getting at least one swap facility will be crucial for Sri Lanka to meet US$ 4.3 billion worth of debt repayments in 2021 and payments including domestic foreign exchange requirements puts the figure at about US$ 7 billion, the news report has further stated.
“The Government and the Central Bank are also continuing discussions with bilateral and multilateral partners, internationally and locally, and we are confident the Sri Lankan economy will continue to display its reliance despite unfounded sovereign rating downgrades that the country experienced in 2020.”
Sri Lanka is on its path to bounce back from the challenges and impact of the global Covid 19 pandemic. Sri Lanka’s economy has shown great resilience to external and internal challenges through the years and is once again showing signs of a quick rebound. Sri Lanka is once again on track to building itself as a business hub in the South Asian region given its geographical positioning in the Indian Ocean and the many trade agreements as well as trade concessions enjoyed by the country. All these have resulted in the growth and expansion of business/investment opportunities in Sri Lanka’s key economic sectors.
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