The currency swap agreement entered on July 24, under the Framework on Currency Swap Arrangement for South Asian Association for Regional Cooperation (SAARC) countries for 2019 - 2022 between the Central Bank and the Reserve Bank of India (RBI) would provide short-term financing to the CBSL to meet the country’s balance of payment requirements.
The intention of the CBSL in entering into this Swap agreement was to be able to maintain a sufficient short-term foreign exchange liquidity while preserving the foreign currency reserve position of the country intact. This Swap agreement has the approval of the Cabinet of Ministers, received on the recommendation of the Monetary Board of the Central Bank of Sri Lanka.Under the Swap agreement, USD 400 million will be received by Sri Lanka, initially for a period of 3 months and will be rolled over twice each with a 3 months tenor, subject to agreement on terms and conditions of the existing SAARC Framework. Further discussions are ongoing to secure an additional USD 1 billion, under a Special Bilateral Swap Agreement with the Reserve Bank of India.
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