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Friday January 21st, 2022
Economy

China’s 10bn yuan swap with Sri Lanka is “unique”, says envoy

ECONOMYNEXT – A 10 billion yuan (close to 1.5 billion US dollars) swap between the central banks of China and Sri Lanka is a “very special, unique” facility given that the arrangement got the approval of Beijing’s top leader, the Chinese envoy to Sri Lanka said.

Though Sri Lanka’s central bank signed the swap arrangement with China in March last year, the island nation’s central bank drew it into the country’s reserves only on December 29 after it failed to boost its official reserves as expected from other inflows.

“I would like to reiterate that it is a very special unique arrangement,” Qi Zhenhong told reporters on Sunday.

“It got the support and was decided by the highest level of leaders from China. It’s a strategic decision by the Chinese leader.”

The Central Bank of Sri Lanka (CBSL) and the People’s Bank of China (PBoC) entered into the currency swap agreement in March last year “with a view to promoting bilateral trade and direct investment for economic development” of the two countries.

The both central banks agreed to use the swap “for other purposes agreed upon by both parties”, Sri Lanka’s central bank said in a statement soon after it signed the agreement.

This Swap agreement was approved by Sri Lanka’s Cabinet of Ministers with the recommendation of the Monetary Board of CBSL.

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Sri Lanka boosted reserves which fell to 1.6 billion US dollars in November to 3.1 billion US dollars in December 2021 with the help of the swap.

Sri Lanka’s President Gotabaya Rajapaksa also asked for debt relief, from China during the visit. (Colombo/Dec10/2021)

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