Sri Lanka seeks USD1.1bn special SWAP facility from India

May 24, 2020 (LBO) – President Gotabaya Rajapaksa yesterday asked Indian Prime Minister Narendra Modi to help Sri Lanka by providing a special SWAP facility of 1.1 billion US dollars to deal with country’s foreign exchange issues.

“If the Government of India could provide USD 1.1 billion special SWAP facility to top up USD 400 million under SAARC Facility, it would enormously help Sri Lanka,” during a telephone conversation, President Rajapaksa requested.

In turn, the Indian Premier has assured that he is personally committed to help Sri Lanka. “We are ready to help under terms that are favorable to Sri Lanka.”

The Central Bank of Sri Lanka recently sought a 400 million US dollar currency swap with the Reserve Bank of India (RBI) under the SAARC facility.

Under the RBI framework on currency swap arrangement for SAARC countries for the period 2019 to 2022, RBI will offer swap arrangement within the overall corpus of 2 billion US dollars. The drawals can be made in US Dollar, Euro or Indian Rupee.

The currency swap facility is available to all SAARC member countries, subject to their signing the bilateral swap agreements and provides certain concessions for swap drawals in Indian Rupee.

Meanwhile, the Indian Premier has commended President Rajapaksa as a leader with a clear vision with the ability to take tough and quick decisions.

“According to the information I have received, Sri Lanka has managed the crisis successfully,” further commented PM Modi. That credit belongs to President Rajapaksa, continued the Indian Premier.

President Rajapaksa sought the intervention of PM Modi to revive some of the key projects as Sri Lanka strives to restore the economy.

He asked PM Modi to “direct those responsible from India’s side to expedite construction of the East Terminal of the Colombo Port as early as possible as it will be a significant boost to our economic landscape.”

“I am trying to promote value added industrial and agricultural activities,” explained President, “and will be happy if you could encourage Indian investors to start such investments, including Indian companies already in Sri Lanka to increase domestic value addition in the context of COVID-19 economic priorities.”

Related: Sri Lanka explores SWAP facilities with regional Central Banks