When Sri Lanka is going through an economic emergency amid a serious scarcity of foreign reserves, the Bangladesh Bank has continued to provide the island nation with liquidity support under a currency swap deal.
The Bangladesh Bank has so far lent $150 million to debt-strapped Sri Lanka in two instalments. In the second instalment, $100 million was released on 30 August this year while another $50 million was transferred earlier the same month.
The rest of the amount promised under the $250 million currency swap agreement will be released on demand of Sri Lanka, said a senior executive of the Bangladesh Bank.
Currently, China along with Bangladesh are providing liquidity support through currency swap deals.
However, the foreign reserve of Sri Lanka continued to deteriorate, compelling the country to announce an economic emergency recently.
After meeting a $1 billion debt repayment in July from reserves, the Sri Lankan government had only enough dollars to cover less than two months of imports.
The spiraling crisis in Sri Lanka raised the risk for Bangladesh about getting back its loan.