India Extends $400 Million Currency Swap Facility To Sri Lanka To Counter Economic Slowdown

India Extends $400 Million Currency Swap Facility To  Sri Lanka To Counter Economic SlowdownPM Modi with Sri Lankan PM Mahinda Rajapaksa (Pic Via Twitter)

In a bid to shore up Sri Lanka's falling forex reserves, the Reserve Bank of India (RBI) has extended a currency swap facility for a sum of $400 million till November 2022, reports Economic Times.

The move comes as a testament to bolstering economic engagement between the two nations. The development was announced in a press release issued by the Indian High Commission in Sri Lanka and will help Colombo address the economic hardships caused due by pandemic.

Sri Lanka will be receiving the currency swap facility from RBI under the South Asian Association for Regional Cooperation (SAARC) framework, which will help the island nation ensure better financial stability and standing which has been vitiated lately since the onset of COVID-19 pandemic.

Meanwhile, the two nations are presently also engaging to reschedule the repayment of debt owed to India by Sri Lanka.

The officials from the two nations held a technical discussion on the subject on 22 July following a telephonic conversation between Prime Minister (PM) Narendra Modi and President Gotabaya Rajapaksa on 23 May, following which a conversation also took place between PM Modi and PM Mahinda Rajapaksa on 27 May.

Next round of technical discussion is now expected to be held soon.