US$ 200 Million Currency Swap

With Bangladesh: A Stepping Stone

- Kelum Bandara

The signing of US$ 200 million currency swap arrangement with Bangladesh has sparked a discussion both in local and regional contexts. On the one hand, it exposed the depth of Sri Lanka’s foreign exchange crisis. On the other hand, it is an instance showcasing the rise of Bangladesh as an emerging economic power in the region.

Internationally, Bangladesh is portrayed in positive light over its achievement as a relatively young nation which celebrated its golden jubilee of independence this year. Born as a country of food deficit, it has emerged today as a country of food surplus. Today, it is among the top ten in the world in 13 sectors. It is fourth in the rice production, first in Hilsa fish production, second in readymade garments, eighth in remittances, third in vegetables, sixth in potatoes, eighth in mangoes, second in jackfruit and second in goats’ milk, third in freshwater fish, and second in outsourcing.

Still a least developed country, Bangladesh has come up a long way to become a country of reckoning. It is now well-positioned to play a dynamic role in regional connectivity. Its foreign reserves stand at nearly US $ 45 billion, mainly thanks to remittances from its expatriate workers. But, it is as low as US $ 4 billion in Sri Lanka. Sri Lanka’s scramble for US dollars is well understood under these circumstances as a country with a huge bill for debt servicing.

After the signing of the currency swap, the Sri Lankan government has been made the subject of humiliation and vilification by its political opposition in the country over the present foreign exchange crisis. The depth of the crisis is now exposed to the country. The opposition has seized the opportunity to pummel the government, mainly on social media platforms.