(NewsRadio); Sri Lanka has received another six-month extension to repay the USD 200 million obtained from Bangladesh in May 2021.
The loan repayment period has been extended thrice.
The Dhaka Tribune reported that the Central Bank of Sri Lanka earlier sought time from Bangladesh to make the first installment of the USD 200 million credit by March this year, hoping that it would be able to restructure its debt by then.
However, the restructuring was not done. Bangladesh Bank Governor Abdur Rouf Talukder while speaking to a group of journalists after a meeting with CBSL Governor Nandalal Weerasinghe at the 2023 Spring Meetings of the World Bank Group and the International Monetary Fund (IMF) in Washington said Sri Lanka is now seeking six more months to repay the loan and has notified that it would make its first installment by August this year and another installment by September.
Talukder has added that the Governor Weerasinghe has confirmed that it would need no further extension.
He said “when a loan repayment period is extended, it is not free of cost. It adds more interest.”
Sri Lanka, facing its worst economic crisis in history, borrowed the fund in May 2021.
The then government could not start repaying the loan and announced its external debt default in April 2022 amid a deepening crisis.
As per the agreement with Sri Lanka, Bangladesh was supposed to receive an interest payment of Libor plus 2% if the amount was returned in three months.
The Libor, the acronym for London Inter-Bank Offered Rate, is a benchmark interest rate at which major global banks lend to one another in the international interbank market for short-term loans.
The three-month Libor averaged around 0.53% in 2021.
Last month, Sri Lanka secured a USD 2.9 billion programme from the IMF to tackle its huge debt burden.
The country owes USD 7.1 billion to bilateral creditors, with USD 3 billion owed to China, followed by USD 2.4 billion to the Paris Club, and USD 1.6 billion to India.
The government also needs to renegotiate more than USD 12 billion of debt in eurobonds with overseas private creditors, and USD 2.7 billion on other commercial loans.