Crisis-hit Sri Lanka defaults on external debt, hopes on IMF lifeline
India Today
Sri Lanka has defaulted on its multi- billion dollar external debt, and has termed the move a "last resort" while waiting on a bailout package from the International Monetary Fund.
In the throes of an economic meltdown, Sri Lanka has defaulted on its multi- billion dollar external debt. The government termed the move a "last resort" after running out of foreign exchange to import desperately needed goods.
The crisis-hit island nation’s finance ministry, which is awaiting a bailout package from the International Monetary Fund (IMF), announced that it would suspend normal debt servicing, and that "orderly and consensual restructuring will take place in a manner consistent with an economic adjustment program supported by the IMF."
The policy would apply to international bonds, all bilateral loans excluding swaps between the Central Bank and a foreign central bank, all loans with commercial banks and institutional lenders, it said.
READ | What is happening in Sri Lanka? Why does it not have money?
According to media reports, Sri Lanka’s external debt servicing obligations are believed to be over $6 billion.
Sri Lanka is grappling with its worst economic downturn since independence. On top of low forex reserves and skyrocketing inflation, the country is experiencing a crippling shortage of rations, fuel and several other essential items.
People have been protesting for weeks over lengthy power cuts and shortage of goods. Blaming the government for poorly handling the economic crisis, they are demanding the resignation of President Gotabaya Rajapaksa.
