India extends duration of $400 million currency swap facility with Sri Lanka

Sri Lanka had also drawn on Indian credit lines worth $1 billion for essential imports and separate ones for the importation of fuel.

In an “unstinted and multi-faceted support” to Sri Lanka which is grappling with its worst-ever economic crisis, India has extended the duration of the $400 million currency swap facility which had been concluded with the island nation in January.

This was the first extension of an international debt instrument to Sri Lanka after the government led by President Gotabaya Rajapaksa on April 12 temporarily suspended debt servicing.

The embattled government had announced an orderly default until the country came to an agreement with the International Monetary Fund (IMF) for a possible bailout package.

“India's unstinted and multi-faceted support to Sri Lanka continued. As ongoing currency support, @RBI extended the duration of the US$ 400 million currency swap for @CBSL which was concluded in #January this year,” the High Commission of India said on Twitter.

However, the debt service suspension was not applicable to currency swap arrangements with other central banks.

The debt default came as the island nation was grappling with its worst-ever economic crisis compounded by forex shortages and a balance of payments crisis.

Sri Lanka had also drawn on Indian credit lines worth $1 billion for essential imports and separate ones for the importation of fuel.