The arrangement has been approved by the Bangladesh Bank but still awaits a nod from the government, a senior bank executive said.

“The Bangladesh Bank approved in principle a $200 million currency swap proposal with Sri Lanka, a country struggling to maintain a moderate foreign exchange reserve,” the Dhaka Tribune newspaper said.

This is the second currency swap deal Sri Lanka would sign in recent months. Previously, it had signed a $1.6 billion dollar swap deal with China.

Media reports also suggested the Sri Lankan government had approached India too for a similar deal, however, India declined the request and asked it to first reach a staff-level agreement with the IMF.

Since the pandemic, Colombo has put several import restrictions to manage its foreign reserves. However, these restrictions have also affected businesses and jobs in the country. Furthermore, the European Union, too, objected to Sri Lankan imports restrictions.