After pulling out of ECT deal, Sri Lanka clears USD 400 million debt to India

Colombo, Feb 05: Sri Lanka has settled a USD 400 million currency swap facility with India, the Indian High Commission here said on Friday.

The Reserve Bank of India (RBI) and the Central Bank of Sri Lanka (CBSL) had concluded the USD 400 million currency swap agreement in July last year under the SAARC currency swap framework.

"This swap facility was drawn by CBSL on July 31, 2020 for an initial period of three months. A three-month rollover was provided at CBSL''s request till February 1, 2021," the high commission said in a statement.

"Further extension would require Sri Lanka having a successfully negotiated staff level agreement for an IMF (International Monetary Fund) programme, which Sri Lanka does not have at present," it said, adding that the CBSL settled the swap facility with the RBI as scheduled.

"It is reiterated that India abides by all of its international and bilateral commitments in letter and spirit," it said.

The SAARC currency swap framework came into operation on November 15, 2012, to provide a backstop line of funding for short term foreign exchange liquidity requirements or short-term balance of payments stress till longer term arrangements are made.

The facility is available to all SAARC member countries, subject to their signing the bilateral swap agreements.

Besides India, the other South Asian Association for Regional Cooperation (SAARC) member countries are - Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka.

Meanwhile, CBSL also tweeted that it has settled its swap facility with RBI as scheduled.

"There was no special request from India for a premature settlement as erroneously reported by certain media outlets. Discussions on future collaboration continue," it said.