Sri Lanka to settle Bangladesh loan by August/ September

COLOMBO (News 1st); Sri Lanka's Central Bank Governor said that CBSL will settle its borrowing of USD 200 Million in August or September 2023.

He was speaking at a briefing at the Central Bank following the decision to relax policy rates on Thursday (1).

"We already mentioned our commitment in agreement to settle in August and September," he told reporters.

The Island nation, which has been facing an acute greenback shortage for months, borrowed $200 million from Bangladesh in May 2021.

The country was scheduled to repay the loans by April last year, but it failed to do so.

In April last year, Sri Lanka announced defaulting on its entire $51 billion of external debt.

As per the agreement between the two countries, Sri Lanka was supposed to repay the loan by March.

But the Island nation was still facing an acute shortage of foreign exchange reserves, which has compelled it to request Bangladesh Bank to extend the repayment period.

Bangladesh Bank extended the deadline at a time when its foreign exchange reserves are depleting at a faster pace.

As per the new deadline, Sri Lanka will have to repay the loan by September this year.