Sri Lanka Economic Crisis
Sri Lanka Economic Crisis: Govt announces default on all $51 billion debt
Colombo: Sri Lanka has run out of foreign exchange and its government on Tuesday announced that it will be defaulting on all its external debt $51 billion as a last resort to prevent further deterioration of its financial position.
Sri Lanka is facing an acute shortage of basic necessities of life such as food, medicine, and fuel amid an economic downturn triggered by the Covid-19 pandemic and poor governance.
The country's finance ministry has said in a statement that creditors, including foreign governments, were free to capitalise any interest payments due to them from Tuesday or opt for payback in Sri Lankan rupees, Economic Times reported.
"The government is taking the emergency measure only as a last resort in order to prevent further deterioration of the republic's financial position," the statement said.
The statement said the decision on default was taken to ensure fair and equitable treatment to all creditors ahead of a recovery programme assisted by the International Monetary Fund.
The crisis has pushed the 22 million people of the island nation into misery, which has led to nationwide protests. There has been widespread anger with people demanding the resignation of President Gotabaya Rajapkse's resignation.
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