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Sri Lanka President requests US$1.1bn forex swap from India, invites port investment

ECONOMYNEXT – Sri Lanka’s President Gotabaya Rajapaksa has requested a 1.1 billion foreign exchange swap from India and also invited an investment in a container terminal in Colombo in a telephone conversation between the two leaders.

Sri Lanka is already asked for a 400 million dollar foreign exchange swap from the Reserve Bank of India under a program for South Asia Association of Regional Corporation (SAARC) nations.

“If the Government of India could provide USD 1.1 billion special SWAP facility to top up USD 400 million under SAARC Facility, it would enormously help Sri Lanka in dealing with our foreign exchange issues,” President Gotabaya Rajapaksa had told Prime Minister Narendra Modi on May 24, his office said.

Prime Minister Modi has said that India is “ready to help under terms that are favourable to Sri Lanka” the President’s office said.

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Sri Lanka cabinet approves US$400mn currency swap from India

Sri Lanka has printed large volumes of money, over-issuing reserve money to generate excess liquidity of over 150 billion rupees in money markets (about 15 percent of pre-crisis reserve money), and triggering loss of credibility in a soft-peg with the US dollar.

Severe import controls have been slapped to stop imports, while anti-Coronavirus curfews also led to a collapse in domestic consumption already.

President Rajapaksa has also asked India to expenditure investment in a container terminal in Colombo.

Colombo Ports top transhipment customer is India, and China already has a terminal there.

President Rajapaksa had asked Prime Minister Modi to “direct those responsible from India’s side to expedite construction of the East Terminal of the Colombo Port as early as possible,” the statement said.

He had invited India to invest in industrial and agricultural value addition.

Sri Lanka has made strong progress in containing Coronavirus having completely killed the Wave I infections from China like Vietnam.

It is now making strong progress in Wave II infections from third countries after closing the airport for new arrivals on March 19 after gaps in testing frontline workers led to the infection of a Navy base.

Modi had commended President Rajapaksa on taking quick decisions to curb Coroanvirus.

“According to the information I have received, Sri Lanka has managed the crisis successfully,” he said. (Colombo/May24/2020)