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Sri Lanka Announces Default on External Debt
Sri Lanka Announces Default on External Debt
Sputnik International
The island country has been mired in a major economic and political crisis: last weekend, President Gotabaya Rajapaksa dissolved his entire Cabinet, except his... 12.04.2022, Sputnik International
2022-04-12T06:40+0000
2022-04-12T06:40+0000
2022-04-12T07:14+0000
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Sri Lankan authorities on Tuesday announced that the nation would default on its $51 billion external debt pending a bailout from the International Monetary Fund.Previously, Central Bank Governor P. Nandalal Weerasinghe said that the country will temporarily suspend foreign debt payments to avoid a hard default, as reserves are required for essential imports.The governor also expressed hope to reach consensus with the creditors, noting that development bonds will be held separately and will not be restructured.Sri Lanka has been sufferring from the worst economic crisis since the nation proclaimed independence in 1948, with shortages of food and fuel causing mass protests. Last week, authorities also declared a state of public health emergency due to a severe shortage of medicines and equipment.The current crisis was triggered, among other things, by a low flow of tourists amid the pandemic. As a result of fuel shortages, prolonged power cuts in some parts of the country are lasting up to 13 hours.
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Sri Lanka Announces Default on External Debt
06:40 GMT 12.04.2022 (Updated: 07:14 GMT 12.04.2022) The island country has been mired in a major economic and political crisis: last weekend, President Gotabaya Rajapaksa dissolved his entire Cabinet, except his brother, Prime Minister Mahinda Rajapaksa amid a nationwide wave of unrest.
Sri Lankan authorities on Tuesday announced that the nation would default on its $51 billion external debt pending a bailout from the International Monetary Fund.
Previously, Central Bank Governor P. Nandalal Weerasinghe said that the country will temporarily suspend foreign debt payments to avoid a hard default, as reserves are required for essential imports.
"It has come to a point that making debt payments are challenging and impossible. The best action that can be taken is to restructure debt and avoid a hard default", he said.
The governor also expressed hope to reach consensus with the creditors, noting that development bonds will be held separately and will not be restructured.
Sri Lanka has been sufferring from the
worst economic crisis since the nation proclaimed independence in 1948, with shortages of food and fuel causing mass protests. Last week, authorities also declared a state of
public health emergency due to a severe shortage of medicines and equipment.
The current crisis was triggered, among other things, by a low flow of tourists amid the pandemic. As a result of fuel shortages, prolonged power cuts in some parts of the country are lasting up to 13 hours.
