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Central Bank clarifies its Repurchase Agreement with FED

Jul 24, 2020 (LBO) – Sri Lanka's Central Bank says that the statement found widely in media that they are pledging USD 4.5 billion worth of US Treasury Securities to obtain a credit facility of USD 1 billion is totally false.

The Central Bank recently entered into an agreement with the Federal Reserve Bank, New York (FED) as a temporary source of US dollar liquidity to be used when required.

The Central Bank said that they have decided to pledge a sum of USD 1 billion worth of US Treasury Bonds held in the CBSL reserve and enter into the above type of Repo facility with the FED.
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"The cost to the CBSL would be the applicable Repo fee, which is about 0.35 percent per annum," the Central Bank said in a statement.

"The CBSL has entered into this agreement with the FED, but no borrowings have yet been made. Withdrawing from the facility at any point is at the discretion of the CBSL."

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