ECONOMYNEXT – Bangladesh was surprised over a quick repayment of a loan borrowed during a currency crisis, Bangladesh Prime Minister Sheikh Hasina has told Sri Lanka president Ranil Wickremesinghe, his office said in a statement.
President Wickremesinghe has thanked Bangladesh for “their unwavering support and assistance during challenging times,” when the two South Asian leaders met in New York on Tuesday.
Prime Minister Sheikh Hasina informed President Wickremesinghe that “she was pleased with Sri Lanka’s speedy recovery from the financial crisis, adding that she had not expected Sri Lanka to pay back the loan so fast,” the statment said.
Sri Lanka’s central bank borrowed money from Bangladesh Bank during a currency crisis, the agency was triggering by interest rates artificially low by printing money.
Sri Lanka in 2022 hike rates allowed maturing debt to be rolled over at market prices and ended a currency crisis.
Sri Lanka repaid another 100 million US dollars in the second installment of the 200 million-dollar loan given by Bangladesh in a currency swap, earlier this month.
Colombo paid 50 million dollars in August in the first installment of the loan repayment. The remaining 50 million is due to be repaid within the current year.
On August 22, Bangladesh’s The Daily Star quoted Bangladesh Bank Executive Director Mesbaul Haque as saying: “We are hopeful that the entire amount will be cleared by September.”
During the 2022 currency crisis, Sri Lanka’s worst in decades, the repayment was extended multiple times. The final extension to September this year was made in May 2022, with the interest rate fixed at LIBOR + 2.5 percent.
Wickremesinghe acknowledged Bangladesh’s generosity and affirmed his desire to strengthen ties between the two countries by visiting Bangladesh in November or December.
Last year Sri Lanka Port Authority met Bangladesh’s Chittagong port officials to find ways to boost connectivity between the two ports. Bangladesh exports and imports are transshipped via Singapore and Sri Lanka. (Colombo/Sep20/2023)