$200M loan to colombo: SL to start paying back next Feb-Mar

Sri Lanka will start repaying Bangladesh the $200 million loan in the first quarter of next year, Bangladesh Bank Governor Abdur Rouf Talukder has said.

The BB governor made the statement after a meeting with P Nandalal Weerasinghe, governor of the Central Bank of Sri Lanka, on the sidelines of the annual meetings of the International Monetary Fund and the World Bank Group in Washington DC on Wednesday.

Colombo is supposed to return the money in three instalments from February-March next year, Talukder said, quoting Weerasinghe.

"This is really very good news for Bangladesh...  its [central bank] governor has confirmed that they would meet the deadline," Talukder told reporters after the meeting.

The island nation, which has been facing an economic crisis, borrowed $200 million from Bangladesh in May 2021. The country could not start repaying the loan and announced its external debt default in April this year amid a deepening crisis.

Bangladesh extended the deadline twice for Sri Lanka, Talukder said.

In April this year, the BB granted Sri Lanka another year for repayment.

The governor of Sri Lanka's central bank confirmed that the nation has undertaken a debt restructuring plan and started talks with India, China and Japan regarding it, Talukder said.

As per the agreement with Sri Lanka, Bangladesh was supposed to receive an interest payment of LIBOR + 2 percent if the amount was returned in three months.

LIBOR, the acronym for London Interbank Offer Rate, is the global reference rate for unsecured short-term borrowing in the interbank market as a benchmark for short-term interest rates. The three-month LIBOR averaged around 0.53 percent in 2021.