Sri Lanka announced a default on its $51 billion foreign debt Tuesday as the island nation grapples with its worst economic crisis in memory and escalating protests demanding the government’s resignation.
Acute food and fuel shortages, as well as long daily electricity blackouts, have brought widespread suffering to the country’s 22 million people in the most painful downturn since independence in 1948. The government has struggled to service foreign loans and Tuesday’s decision comes ahead of negotiations for an International Monetary Fund bailout aimed at preventing a more catastrophic hard default that would see Sri Lanka completely repudiate its debts.
“Sri Lanka will suspend repayments for an interim period pending an orderly restructuring,” Treasury Secretary Mahinda Siriwardena told reporters. Just under half of Sri Lanka’s debt is market borrowings through international sovereign bonds (ISB), including one worth $1 billion that was maturing on July 25.— AFP
