B'desh to get loans worth $400 mn from India's swap fund
Dhaka: Bangladesh can take loans worth USD 400 million to maintain its balance of payments from India under a USD 2 billion swap fund established by the RBI for SAARC countries.
"We will be able to take loans worth USD 400 million through the swap arrangement," Bangladesh Bank Governor Atiur Rahman told a workshop of the Economic Reporters Forum (ERF) held Sundayat the central bank's headquarters.
Rahman said the Reserve Bank of India (RBI) would fund the swap initiative and the member countries would be given the loans in three installments on their demands.
The Reserve Bank of India (RBI) will finance the swap arrangement finalised at the meeting of South Asian Association for Regional Cooperation (SAARC) Finance Governors' in Nepal last week.
India's central bank has formed a USD 2 billion fund for a regional swap arrangement for the members of the South Asian regional grouping and the facility would be available in both foreign currency and Indian rupee.
The Reserve Bank of India had said SAARC members can now approach the RBI for availing of the facility.
Bangladesh Bank officials said central bank liquidity swap is a contract in which two parties agree to exchange currencies, periodic interest payment and securities for mutual benefit.
"In this case, SAARC members will exchange periodic loan and interest mainly to tackle the balance in their import and export financing," a central bank official explained.
The recipient countries will pay interest at the rate of London Interbank Offered Rate (LIBOR) plus two percent for the first two installments.
The rate of interest for the third installment will be two and a half percent over the LIBOR.
The swap arrangement will be offered in US dollar, euro and Indian rupee against the domestic currency or government securities in domestic currency.
Rahman said Bangladesh like other countries would use the swap fund mainly at the time of payment to the Asian Clearing Union (ACU) to manage the additional pressure on external account.
Beside this development, he said, the inflation was continuing downward trend and would come further down to a more comfortable position below double-digit by the end of this current financial year ending June 30.
He said the monetary policy would also maintain its position to tackle inflation, allowing more support to real sectors for development and financial inclusion.