Bangladesh has agreed to give Sri Lanka loans of at least $200 million from the foreign exchange reserves under a currency swap deal.
This is the first time Bangladesh is giving loans to another country from the reserves by swapping currency.Analysts see no risk in the process, but warned it may get difficult to get back the money some times.
Serajul Islam, a spokesman for the Bangladesh Bank, said on Tuesday that it approved the decision in principle to help the South Asian neighbor whose foreign exchange reserves are dwindling.
Bangladesh will provide Sri Lanka with $200 million to $250 million under the deal following the island nation’s request.
Sri Lanka will repay over three months with 2 percent interest on the Libor rate, according to Serajul.
Researcher Ahsan H Mansur said the deal will brighten Bangladesh’s image, but sometimes problems arise in getting the money back .
It will also help Bangladesh gain points in credit ratings, according to Atiur.
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