Sri Lanka has been improving its economy, and paid back another $100 million in the second installment out of $200 million given by Bangladesh in a currency swap agreement two years ago.
On August 17, it sent the first installment of $50 million to Bangladesh, as a result, Sri Lanka has repaid 75 percent of a $200 million loan.
The island nation, which announced its first-ever sovereign default in April 2022, has negotiated with the International Monetary Fund (IMF) for a bailout of $2.9 billion.
Sri Lanka faced its worst economic crisis in history due to a shortage of foreign exchange reserves.
An imperative in the IMF bailout is to restructure external debt, which needs to be completed by September.
According to media reports, Sri Lanka’s inflation decreased to 6.3 percent, a single-digit figure for the first time in two years, providing much-needed relief to the people amid the worst financial crisis.
The last time single-digit inflation was recorded was 5.8 percent in September 2021. The highest inflation since the island nation's economy came under its worst crisis was 69.8 percent in September last year.
Sri Lanka's foreign exchange reserves have risen in part due to rising dollar receipts from tourism and remittances.
Md Mezbaul Haque, spokesman of the Central Bank, Sri Lanka has returned a total of $150 million with the latest installment.
He hopes that the rest of the amount will be cleared by September this year.
Bangladesh gave a loan of $200 million in four installments during September-October 2021. This loan was given to the country under the currency swap system.
The one-year loan to the country expired in September last year. Later, the time was extended several times to three months for the consideration of their application.
Bangladesh is getting one and a half percent interest plus London Interbank Offered Rate (LIBOR) against the loan.
Meanwhile, in the first phase, on August 19, 2021, Bangladesh Bank released $50 million. In the second phase, $100 million was given on October 30. And in November of the same year, $50 million was given to the country.
Under the one-year loan agreement, the money was to be repaid with interest between August, October and November last year. However, the country failed to repay the loan on time due to its fragile state.
According to Bangladesh Bank, till August 30, the country's reserves currently stood at $29.20 million, and according to the accounting system of the International Monetary Fund (IMF), the actual reserve amount of the country stood at $23.06 billion.
