Indo-China SWAP Facilities in Final Stages
By Ishara Gamage
The objective of the Government and the Central Bank is to alleviate the current foreign exchange crisis from unconditional, non-credit generating sources, Central Bank Governor, Prof. W.D. Lakshman said yesterday (19).
Joining the CBSL routine press briefing on post -Monetary Policy review via Zoom Technology, the Governor further stated that local and foreign bilateral and multilateral discussions in this regard are going on very successfully.
The Governor said talk had not resumed with the International Monetary Fund (IMF) on the concessional loans (Rapid Credit Facility -RCF) which is tied to the coronavirus pandemic. However, he said talks with them on other technical issues concerning the economy would continue.
CB Deputy Governor Dhammika Nanayakkara stated that the current tense situation in the foreign exchange market will soon subside.
He said that although the exchange rate has been depreciating these days due to higher foreign exchange demand, the situation would be alleviated through various forthcoming foreign funding arrangements.
He also said that there was no need for the Central Bank to intervene in the interbank foreign exchange market on a large scale and that this would allow banks to conduct independent foreign exchange transactions. He said that discussions will be held with the banks in this regard.
Speaking on the foreign exchange crisis, Dhammika Nanayakkara said that discussions were being held on whether to go to international markets in the future or other local sources of foreign exchange earnings, taking into account local and foreign economic conditions and the secondary market activities of the sovereign bond market.
“Sri Lanka’s next sovereign bond is due to mature in June, so there is still plenty of time to find suitable sources of foreign exchange,” he said.
The Government plans to raise about US$ 2.5 billion through SWAP facilities through the Central Banks of India and China.
Out of these, very positive information about the Chinese facility can be expected within the next few weeks, said Deputy Governor Mahinda Siriwardena. He added that the Federal Reserve Bank of India is awaiting the approval of their Ministry of Finance to go ahead with its US$ 1billion swap facility with Sri Lanka.