Sri Lanka has signed a 10 billion yuan (about USD 1,5 billion) currency swap deal with China with the main motive to promote bilateral trade and direct investment between the two countries. The agreement signed between the Central Bank of Sri Lanka and the People’s Bank of China is valid for three years. China remains Sri Lanka’s largest source of imports. In 2020, imports from China amounted to USD 3.6 billion, or just over 22 per cent of Sri Lanka’s imports.
About the agreement:
- The deal comes as Sri Lanka is undergoing a difficult time with COVID-19, dealing a severe blow to its economy, especially its USD 4.5 billion tourism industry.
- Sri Lanka also must pay nearly USD 4.5 billion in foreign debts annually until 2025.
- China considers Sri Lanka to be a critical link in its massive “Belt and Road” global infrastructure-building initiative and has provided billions of dollars in loans for Sri Lankan projects over the past decade. The projects include a seaport, airport, port-city, highways and power stations.
Important takeaways for all competitive exams:
- Sri Lanka Capitals: Sri Jayawardenepura Kotte; Currency: Sri Lankan rupee.
- Sri Lanka Prime Minister: Mahinda Rajapaksa; Sri Lanka President: Gotabaya Rajapaksa.