Sri Lanka has paid the entire debt to Bangladesh.A top official of Bangladesh Bank told The information on Friday.He said Sri Lanka paid the final installment of $50 million and $4.5 million in interest on the loan on Thursday night. We learned about it on Friday morning.
Sri Lanka paid off the debt at a time when Bangladesh’s foreign exchange expenditure was outpacing its earnings, resulting in dwindling reserves.According to the data of the Central Bank, the country’s total foreign exchange reserves were 21.45 billion dollars as of 21 September yesterday.
Earlier, Sri Lanka returned USD 100 million to Bangladesh on September 2. Earlier, the country had paid $50 million in the first installment on August 17.During the currency swap agreement, Sri Lanka was supposed to repay the loan within three months at the London Interbank Offer Rate + 2 percent interest rate.
The London Interbank Offer Rate has served as the global reference rate for short-term lending in the interbank market and the benchmark for short-term interest rates as of June 30 this year. Later the London Interbank Offer Rate was replaced by the Secured Overnight Financing Rate.
Bangladesh gave this loan to Sri Lanka in 2021 in three installments. On August 19 of that year, the first installment was $50 million, the second installment was $100 million 11 days later, and another $50 million in September. This was Bangladesh’s first loan to any country.
However, they repaid the debt just as the troubled country’s economy was recovering.Analysts say Sri Lanka could be a prime example of global economic instability. Because the country is now recovering from their critical situation.
Just a year ago, Sri Lanka was in the worst economic crisis in its history and the country’s inflation was 69.8 percent in September last year.However, Sri Lanka’s inflation in July this year was 6.3 percent, which is much lower than June’s 12 percent.