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Tuesday September 28th, 2021
Economy

Sri Lanka exchanges IMF special drawing rights for US dollars

ECONOMYNEXT – Sri Lanka has swapped most of a tranche 554.8 million special drawing rights (about 780 million US dollars) given to the country the International Monetary Fund for US dollars after getting them on August 2021, according to information published by the central bank.

The central bank had 132 million SDRs left by the end of August. The central bank usually has about 20 to 30 SDR in its reserves.

The IMF created 650 billion SDRs in August and distributed them to its members.

The IMF has warned that the SDRs are not a transfer of wealth.

They are a paper asset (holdings) which is balanced by a liability (allocation), a little similar to currency swap, except that the interest rate on both sides are the same.

Interest is received on the holding and paid on the allocation, leaving the receiver without a net payment other than a fee to the SDR Department of the IMF.

However as soon as an SDR is sold, the incoming interest stops and the central bank becomes a net payer.

Sri Lanka has to pay about 100,000 dollar a month for the converted SDR according to IMF data. (Colombo/Sept11/2021

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