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Sri Lankan Minister defends Bangladesh currency swap

Sri Lankan Minister, Ajith Nivard Cabraal, defended the governments $250 million currency swap with Bangladesh implying it was not disgraceful for Sri Lanka to seek this arrangement with one of the most impoverished countries in the world.

Cabraal responded to a question during webinar on the arrangement by claiming that “Bangladesh is loaning more money to the US than to anybody else, the same way Sri Lanka is”. He further added:

“When Sri Lanka loans money to the US or any other advanced country in the European Union, we call it an investment. The only thing (difference) when you give it to a so-called third world country, is a loan — that is the only difference”.

The Indian Express notes that this was first time that Sri Lanka is borrowing from a SAARC country other than India. They further state that Sri Lanka had approached India last year requesting a $1 billion credit swap as well as a moratorium on debts however, India-Sri Lanka relations have been tense over Colombo’s decision to cancel a valued container terminal project at Colombo Port.

The India Express also noted Bangladesh's recent successfully economic growth becoming the fastest growing in South Asia. Bangladesh’s economy grew by 5.2 per cent in 2020 and is expected to grow by 6.8 per cent in 2021. It's per capita income has overtaken India.

The Indian Express further highlighted Sri Lanka’s deep debts and noted that in April, China provided a $1.5 billion currency swap as well as a $1 billion loan. Sri Lanka owes China an estimated $5 billion.  Last July India extended a $400 million credit swap however in February this was not further extended.

Read more here: 'Deeper into poverty' - Sri Lanka's economic devastation detailed in World Bank report

Read more here and here.

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