Sri Lanka requests India to extend USD 1.5bn swap facility by one year

central bank of sri lanka

Dec 17, 2015 (LBO) – Sri Lanka’s Finance Ministry has requested India to extend the existing 1.5 billion US dollars swap facility by one year, the finance minister told Parliament Thursday.

“I spoke to Indian Finance Minister Arun Jaitley and requested to extend the USD 1.5 bn facility by another year,” Finance Minister Ravi Karunanayake said.

“Because India is doing a devaluation. But With yesterday’s FED rate hike the uncertainty will be cleared,” he said.

The reserve bank of India and the central bank of Sri Lanka entered into a currency swap agreement of 1.5 billion US dollars in March this year at the sidelines of Indian Prime Minister Narendra Modi’s vist to Sri Lanka.

“From that amount, we already paid 500 million US dollars to India in November. The balance amount should be paid in March next year,” Karunanayake said.

Minister Karunanayake revealed that foreign reserves are currently at 6,100 million US dollars.

“By December 2015, this reserve has increased to 6,000 million US dollars, around 400 million US dollars decrease against the last year. We had to pay a bullet payment of 1,500 million US dollars by last November. This 6,100 million US dollars amount is with that amount.”

In a bullet payment, a lump sum is paid for the entire loan amount at maturity.

Finance Minister in his budget speech stated that the government expects the official reserves of the country will increase to 10 billion US dollars by end June 2016.

Finance Minister further stated that around 750 million US dollars have so far being received as foreign remittances from other countries.

“We are seeing an in-flight of dollars coming after the budget owing to the fact that we have wanted foreign remittances to come in,” he said.

“We are encouraging them to bring their deposits to our country which is encouraging about 2 percent return on the remittances and we see a positive trend taking place.”