Bangladesh gives Sri Lanka 6 more months to repay $200m loan

The Bangladesh Bank has extended the repayment period of the $200 million loan to Sri Lanka by six months until September this year amid the recovery of the South Asian country from its devastating economic crisis.

The central bank made the decision at its board meeting on Thursday, a senior official, wishing to remain unnamed, told The Business Standard.

The Bangladesh Bank lent $50 million to Sri Lanka for the first time in August 2021. Later, it provided another $150 million in two phases.

The debt-burdened Sri Lanka was supposed to repay the loan within March this year. Sri Lankan central bank Governor Nandalal Weerasinghe in a meeting with Bangladesh Bank Governor Abdur Rauf Talukder last October also said they would repay it on time.

Meanwhile, Thursday’s board meeting of the Bangladesh Bank also in-principal approved the monetary policy for the second half of the FY23, Bangladesh Bank Spokesperson and Executive Director Md Mezbaul Haque confirmed to TBS.

“Taming inflation and keeping liquidity supply normal are the main objectives of the monetary policy. The formulation is still in progress.”

“As the policy is not finalised yet, nothing can be said for sure. We will let everyone know [about the changes] on 15 January,” he added.

In the monetary policy for FY23, the central bank projected private sector credit growth at 14.10% until June next, which was 14.80% in the previous edition of the monetary policy.

According to the latest data by the central bank, the growth rate hovered near 14% in the first five months of the ongoing fiscal year – 13.97% in November, 13.91% in October, 13.93% in September, 14.07% in August and 13.95% in July 2022.

Besides, the net government borrowings from banks stood at Tk32,249 crore in the first six months of FY23.

The Bangladesh Bank used to announce half-yearly monetary policies before the pandemic. In FY20 and FY21, it announced the policy for a year. This year the central bank has returned to its normal way.

The recently visited delegation of the International Monetary Fund also suggested the announcement of monetary policy twice a year.  (Courtesy The Business Standard)