COLOMBO: Sri Lanka’s central bank has received a two-month deferral for $900 million in payments due this week to the Asian Clearing Union, multiple sources said, helping ease pressure on its meager reserves amid its worst financial crisis in years.

One payment of $509 million was deferred by the Reserve Bank of India (RBI) in mid-January, the Indian High Commission in Colombo said, as part of a $900 million package of financial assistance that included a $400 million swap.

The RBI extended that deferral by another two months following a request by Sri Lanka’s central bank.

A second payment of about $400 million to $450 million for imports purchased during the last two months was also due but a two-month deferral was given by the ACU Secretariat based in Teheran, three sources at the central bank confirmed to Reuters.

The ACU is made up of nine countries including India, Sri Lanka, Bangladesh and Myanmar. The monetary authorities use the ACU as an intermediary to make foreign exchange payments for imports between member countries, usually every three months.

“The deferral gives temporary breathing space for Sri Lanka,” former central bank deputy governor W.A. Wijewardena told Reuters.

“Eventually, when the payments come due if we don’t have foreign exchange with us at that time we will in trouble.”

Sri Lanka’s reserves dipped to $2.36 billion at the end of January but the country has to repay about $4 billion in debt repayments this year including a $1 billion international sovereign bond maturing in July.

As the dollar shortage has worsened, the island has been struggling to pay for essential imports including food, medicine, cooking gas and fuel.

On Monday the central bank also relaxed an unofficial peg allowing the exchange rate to move down from 200-203 rupees and set the upper limit at 230 rupees to attract remittances to top up reserves.