India backs Sri Lanka with US$900mn in deferred payments, swap

ECONOMYNEXT – The Reserve Bank of India has provided Sri Lanka with a 500 million US dollar delay in payments and a 400 million US dollars, the Indian High Commission in Colombo said.

“High Commissioner met governor of central bank of Sri Lanka and expressed India’s strong support to Sri Lanka in the wake of Reserve Bank of India (RBI) extending over USD 900 million facilities over the last week,” Indian High Commission in Sri Lanka said in a message.

“These comprise deferment of Asian Clearing Union settlement of over USD 500 million and currency swap of USD 400 million.”

The Asian Clearing Union is a regional settlement arrangement between money printing central banks that had chronic forex shortages in 1974 after the collapse of the Bretton Woods system of soft-peg.

Settlements are usually made quarterly.

Separately Central Bank Governor Nivard Cabraal said India’s High Commissioner in Colombo has confirmed support to Sri Lanka at a meeting.

“Had an excellent discussion with Indian High Commissioner to #SriLanka HE Gopal Baglay at my office this morning where he confirmed the #SAARC #SWAP by RBI and other forms of bilateral cooperation,” Cabraal said.

The statements come a day after Standard and Poor’s downgraded Sri Lanka by one notch to ‘CCC’

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