Bangladesh clears currency swap facility to boost Sri Lanka’s depleting foreign reserves

Gotabaya Rajapaksa's year-old request to Narendra Modi for a $ 1.1 billion currency swap is pending

Bangladesh on Tuesday cleared a $200 million currency swap facility for Sri Lanka, to help boost its economy, becoming the first South Asian country to extend crucial financial assistance to the island nation this year. Dhaka-based The Daily Star newspaper reported on Wednesday that Bangladesh was extending “a lifeline of sorts to the beleaguered Sri Lankan economy,” offering to top up its depleting foreign reserves. “The board of the Bangladesh Bank has decided in principle to lend $200-250 million from Bangladesh’s reserves to Sri Lanka for three months,” Mohammad Sirajul Islam, a spokesman for the Bangladesh Bank, the country’s central bank, told AFP in Dhaka. With Sri Lanka’s main foreign exchange-earning sectors – tourism, export of garments and tea – badly hit due to the pandemic, the country has been struggling to maintain its reserves in the face of a daunting debt repayment schedule. In April 2021, Sri Lanka’s foreign reserves stood at $ 4.5 billion, about the same amount that the country is due to settle this year in external loan repayments.