Central Bank of Sri Lanka (CBSL) - Reserve Bank of India (RBI) SWAP Arrangement, Indian support in time of need
Indian support in time of need
The RBI has stepped in to provide timely support to Sri Lanka when its external finances were deteriorating and the currency was under pressure. The $400 million, drawn upon by the CBSL under the SWAP arrangement with the RBI, was one of the outcomes of Prime Minister Modi’s visit to Sri Lanka. There is a further $1.1 billion which can be utilized. These arrangements are providing much-needed insurance against depleting external reserves and a boost to the creditworthiness of the country. However, it is important to realise that the support provided by the SWAP arrangement with the RBI only serves to buy time. It does not address the underlying causes of the elevated risks associated with the country’s external position.