The Bangladesh Bank (BB) has extended validity of the 200 million US dollar credit facility it extended to Sri Lanka by three months after the expiry of its first three-month tenure, the Dhaka-based New Age reported.
The loan facility has been renewed following a request from the island nation, New Age quoted a senior BB official as saying on Sunday (26).
The forex-rich Bangladesh extended the credit facility amounting to $200 million under a currency swap deal with Sri Lanka, to be delivered in three tranches as follows: 50 million US dollars on August 19, 100 million dollars on August 30, and the final 50 million dollars on September 21.
As per the agreement, Bangladesh would receive 2 per cent plus LIBOR (London Inter-Bank Offered Rate) 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, New Age reported.
“Our assessment is that the Sri Lanka would use the fund for at least nine months,” the publication quoted the BB official as saying.
The currency swap initiative was taken after Sri Lankan Prime Minister Mahinda Rajapaksa’s visit to Bangladesh to join the celebrations of the golden jubilee of Bangladesh’s independence and received the BB’s approval in May.
The island nation also received another 787 million US dollars from the International Monetary Fund’s special drawing rights (SDR) allocation to boost its reserves in September.
While Sri Lanka’s forex reserves plummeted, Bangladesh’s reserves stood at 46.3 billion US dollars after hitting a record high of 48 billion from around 33 billion one and a half year ago, according to New Age.