Sri Lanka defaults on $51bn external debt, calls it ‘last resort’ as country runs out of foreign currency

Sri Lanka’s finance ministry said in a statement that creditors, including foreign governments, were free to capitalize interest payments owed to them from Tuesday or opt for repayment in Sri Lankan rupees. lankans.

The economic crisis has led to continued protests in Sri Lanka. The Lankans demand the resignation of President Gotabaya Rajapaksa in Colombo. PA

Dove: Crisis-hit Sri Lanka defaulted on its $51 billion foreign debt on Tuesday, calling it a “last resort” after running out of foreign exchange to import desperately needed goods.

The island nation is grappling with its worst economic downturn since independence, with regular power cuts and severe food and fuel shortages.

Sri Lanka’s finance ministry said in a statement that creditors, including foreign governments, were free to capitalize interest payments owed to them from Tuesday or opt for repayment in Sri Lankan rupees. lankans.

“The government is only taking the emergency measure as a last resort to prevent a further deterioration in the financial situation of the republic,” the statement said.

He added that the immediate default was to ensure “fair and equitable treatment of all creditors” ahead of an International Monetary Fund-assisted recovery program for the South Asian nation.

The crisis has caused widespread misery for Sri Lanka’s 22 million people and led to weeks of anti-government protests.

International rating agencies had downgraded Sri Lanka last year, preventing the country from accessing foreign capital markets to raise much-needed loans to finance imports.

Sri Lanka had requested debt relief from India and China, but the two countries instead offered more lines of credit to buy commodities from them.

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