Colombo, March 23 (Bloomberg) – China signed a currency swap agreement with Sri Lanka as the South Asian nation looks to reduce reliance on the International Monetary Fund before $3.7 billion of foreign debt matures this year.
The Central Bank of Sri Lanka is entitled to a 10 billion yuan ($1.5 billion) swap facility from the People’s Bank of China, Sri Lanka’s monetary authority said in a statement Monday. The agreement is valid for three years.
Faced with low foreign-exchange reserves and looming debt repayments, Sri Lanka is getting closer to China, it’s biggest import partner. More than 22% of the island nation’s foreign purchases were from China last year.
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