Sri Lanka pays back $50 million to Bangladesh

(LANKAPUVATH | COLOMBO) – Despite struggling with an economic crisis, Sri Lanka has paid back $50 million to Bangladesh out of the $200 million loan given by Dhaka under a currency swap mechanism in 2021, Dhaka Tribune reported.

Confirming the deposition of the first installment by the Sri Lankan authorities, Bangladesh Bank (BB) spokesperson and executive director Md Mezbaul Haque said the Bank received the installment on August 17.

He also informed that the amount has bumped up the country’s forex reserves.

Haque said the Bank is expecting a second installment within this month but declined to comment on what the amount of the second installment will be.

Bangladesh provided a loan amounting to $200 million from its foreign reserve to Sri Lanka, helping the reeling South Asian economy recover from an economic shock in September 2021.

The term of the one-year loan expired in September last year.

Then the term was extended twice in three months till March this year.

Finally, the neighboring country was given another six-month till September to repay the loan.

The first tranche of $50 million was sent on August 19, the second installment of $100 million on August 30 and the remaining $50 million in September of 2021.

As per the agreement with Sri Lanka, Bangladesh was supposed to receive an interest payment of Libor plus 2% if the amount was returned in three months.

Earlier in March, Sri Lanka secured a $2.9 billion program from the IMF to tackle its huge debt burden.

The country owes $7.1 billion to bilateral creditors, with $3 billion owed to China, followed by $2.4 billion to the Paris Club, and $1.6 billion to India, said Reuters.

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