Jan 09, Colombo: Sri Lanka's Central Bank on Wednesday said that the Reserve Bank of India (RBI) has agreed to provide US$ 400 million under its SAARC swap facility to boost the country's reserves.
"The RBI's very rapid and timely assistance will serve to boost investor confidence by supporting Sri Lanka to maintain an adequate level of external reserves while accommodating outflows related to imports, debt servicing and, if necessary, support for the currency to avoid disorderly adjustment," the Central Bank said in a statement.
Sri Lanka Central Bank has also requested a further bilateral SWAP arrangement of USD 1 billion between the RBI and CBSL which is under consideration.
The CBSL acknowledged the very active role played by the Government of India, the Sri Lankan High Commission, in Delhi, and the Indian High Commission, in Colombo, in facilitating these arrangements.
With the end of the delays related to the political developments in the country, the Government of Sri Lanka and the CBSL have also already revived action to: (1) issue international sovereign bonds; (ii) obtain term loans; and (iii) negotiate credit lines through the State banks on behalf of the government. It is expected that these operations will be completed in 1Q 2019.
Following the political crisis set off by the President in October last year, the big three credit rating agencies - Fitch Ratings, Standard & Poor's (S&P) and Moody's - downgraded Sri Lanka's sovereign rating making it hard for the Central Bank to obtain loans.
The Central Bank said in addition, Mangala Samaraweera, Minister of Finance and Mass Media will be visiting Washington from 14 - 16 January 2019 to resume negotiations with the IMF on the Extended Fund Facility.