Friday, 31 July 2020 07:47

Sri Lanka to get $ 1 billion US Fed Reserve facility

The Central Bank (CB) says that it was pledging US$1 billion worth of US Treasury Securities to obtain a credit facility of $1 billion.

While the CB has entered into an agreement with the Federal Reserve Bank, New York to make use of a repo facility where the Central Bank (CB ) can raise $1billion from the Fed, no borrowings have yet been made. Withdrawing from the facility at any point is at the discretion of the CB, the banking regulator said in a statement.

However a senior Treasury official confirmed that arrangements are being made to utilise this temporary repurchase agreement facility for the purpose of enhancing the country’s reserves.

A fiscal policy decision has been taken towards this end following the lowering of interest rates to 2.00 – 2.25 per cent from 2.25-2.50 per cent by US Fed recently, the official said.

The money will be used for urgent dollar liquidity support as the country’s economy has been badly hit by COVID-19, he opined.

Meanwhile the Finance Ministry is also planning to raise a Foreign Currency Term Financing Facility (FTFF) of up to US$500 million for the purposes of financing the expenditure as approved in the Vote on Account (VOA) for fiscal year 2020.

(LIN)

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