Senior Deputy Governor of the Central Bank of Sri Lanka Dr. Nandalal Weerasinghe stated that Sri Lanka has more than sufficient reserves to meet its debt servicing obligations and there is no issue with debt repayment for this year.

“We have already received $ 400 million under the SAARC SWAP facility. That is why the reserve level has gone up to 7.2 billion and to repay the October maturity I think we have more than sufficient comfortable level of reserves so that we can meet that debt service payment without any issue. If you look at the balance part of this year, it is about 2.5 billion and we have 7.2 billion. So, I think we don’t see any issue with debt repayment for this year, and then going forward the government will come up with a borrowing strategy and then we can look at it,” Dr. Weerasinghe told media whilst addressing the monetary policy meeting in Colombo recently.

The CBSL entered into a $ 400 million bilateral currency SWAP agreement with the Reserve Bank of India (RBI) on, 24 July 2020 under the Framework on Currency Swap Arrangement for South Asian Association for Regional Cooperation (SAARC) countries for 2019 - 2022.

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.

Under the Swap agreement, $ 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.