Bangladesh has extended validity of the credit facility of 200 USD under a currency swap to Sri Lanka by another three months after the expiry of the first three-month tenure of the credit facility Bangladesh Media reports .
The decision has been taken following a request from the Sri Lanka, a senior official of the central bank has told to the media. The credit facility amounting to $200 million under a currency swap deal with Sri Lanka.
The island nation received the loan facility from Bangladesh in three tranches.
The Bangladesh Bank released $50 million as the first tranche under a currency swap deal to support the poorly-rated Sri Lanka on August 19, 2021.
The second tranche amounting to $100 million was released on August 30, 2021 and the final installment worth $50 million was released on September 21, 2021.
As per the agreement, Bangladesh would receive 2 per cent plus LIBOR as interest on the credit amount.
If the instalment principal remains unpaid even after six months, the applicable interest would be 2.5 per cent plus LIBOR.
‘Our assessment is that the Sri Lanka would use the fund for at least nine months,’ the BB official said.
The impact of the Covid outbreak has been devastating on the island nation’s economy which contracted by 3.4 per cent in 2020.
a, which is facing a sharp trade deficit, declined to around $3 billion by the end of August 2021.
