We couldn’t continue because we had no deal with IMF – Harsha

Harsha De Silva

The Central bank of Sri Lanka (CBSL) yesterday said that it had settled its Swap facility with Reserve Bank of India and there was no special request from India for a premature settlement.

“Such claims are erroneously reported by certain media outlets. There will be more discussions in the future and collaboration will continue,” CBSL said in a press release.

Meanwhile, Samagi Jana Balawegaya (SJB) MP Harsha de Silva said that the country’s foreign reserves were falling dramatically and the rupee was under severe pressure as Colombo was not able to extend the repayment of the facility to November 2022.

Dr. Silva said that usually a country did not end a Swap after the first rollover. However, the continuation of a rollover was only possible if Sri Lanka had reached an agreement with the IMF for assistance on expanding the reserves.

“So, no IMF agreement means there is no renewal. This also means that we can’t access the additional USD 1,000m SWAP either. Our reserves are falling and the rupee is under severe pressure,” Silva said.

Reserve Bank of India (RBI) had signed an agreement for extending a $400-million currency swap facility to Sri Lanka in July 2020 to boost the foreign reserves and ensure financial stability of the country, he said.

The Indian Express said: “The Indian High Commission in Colombo said the currency swap arrangement will remain available till November 2022. Sri Lanka in April said it was set to enter into an agreement with the RBI for a currency swap worth $400 million under the South Asian Association for Regional Cooperation (SAARC) framework. Sri Lankan President Gotabaya Rajapaksa had made an additional request to India for a special $1.1 billion currency swap facility in May.

“Reserve Bank of India signs document for $400 million currency swap facility to Sri Lanka till Nov 2022,” the Indian Mission tweeted. “After debt repayment rescheduling discussions yesterday, this development is another example of India’s strong commitment to work with #lka in post #COVID19SL economic recovery,” it said.”

(Source: The Island)

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