Sri Lanka to start talks over Bank of China loan
ECONOMYNEXT- Sri Lanka’s cabinet of ministers had given the nod to begin talks with Bank of China for a 3-year loan, Minister Eran Wickramaratne said.
Bank of China had offered to give 300 million dollars at 2.6 percent above the London Interbank Offered Rate to Sri Lanka for three years.
The loan could be upsized to a billion US dollars.
China Development Bank had earlier given another loan for 8-year at a below market rate to bailout Sri Lanka.
Sri Lanka has a soft-pegged exchange rate, where the central bank intervenes in forex markets to target an exchange rate under multiple convertibility undertakings and then prints money to target an interest rate, generating monetary instability forex ‘shortages’. (Colombo/Jan18/2019)