RBI Signs Documents To Extend $400 Million Currency Swap Facility To Sri Lanka
The Sri Lankan flag flies in front of the Bank of Ceylon, left, and the World Trade Towers in Colombo, Sri Lanka. (Photographer: Prashanth Vishwanathan/Bloomberg)

RBI Signs Documents To Extend $400 Million Currency Swap Facility To Sri Lanka

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The Reserve Bank of India has signed necessary documents for extending $400 million currency swap facility to Sri Lanka to boost the island nation's forex reserves due to the coronavirus pandemic, the Indian High Commission in Colombo said on Saturday.

The currency swap arrangement will remain available till November 2022, it said in a statement. The High Commission has conveyed this information to senior officials in the Government of Sri Lanka and the Central Bank of Sri Lanka.

Sri Lanka had in April said it was set to enter into an agreement with RBI for a $400 million currency swap under the SAARC framework to boost the foreign reserves and ensure financial stability amid the pandemic. In May, President Gotabaya Rajapaksa made an additional request to India for a special $1.1 billion currency swap facility.

On July 14, Deputy High Commissioner Vinod K Jacob met and discussed the currency swap arrangement with W.D. Lakshman, governor of the Central Bank of Sri Lanka. The two countries also held technical discussions on rescheduling of bilateral debt repayment by Sri Lanka on July 22.

An Indian delegation comprising senior officials from the Ministry of External Affairs, Ministry of Finance, and the EXIM Bank interacted with representatives from the Department of External Resources of Sri Lanka through a video conference.

"The High Commission has remained closely engaged in fruitful bilateral cooperation with Sri Lanka on all matters of mutual interest. It would be recalled that on July 22, the High Commission facilitated constructive technical discussions on rescheduling of bilateral debt repayment by Sri Lanka," the statement said.

The meeting was a sequel to telephonic conversations between Prime Minister Narendra Modi and Sri Lankan President Gotabaya Rajapaksa on May 23 and with Prime Minister Mahinda Rajapaksa on May 27.

The next round of technical discussions between the two sides on rescheduling of debt repayment is expected to be held soon.

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