Colombo: Crisis-stricken Sri Lanka defaulted on its $51 billion external debt on Tuesday, calling the move 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 blackouts and acute shortages of food and fuel.
Sri Lanka's finance ministry 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.
"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.
It added that the immediate debt default was to ensure "fair and equitable treatment of all creditors" ahead of an International Monetary Fund assisted recovery programme 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, effectively blocking the country from accessing foreign capital markets to raise much-needed loans to finance imports.
Sri Lanka had sought debt relief from India and China, but both countries instead offered more credit lines to buy commodities from them.
First Lebanon now Srilanka declared themself bankruptcy. After the covid-19 break out some countries(especially those whose source of income was from tourism) face severe consequences. Another source of income was exporting quality tea which was also reduced significantly. Srilankan tea brand is infamous in the world. Besides that, some bad decisions from the govt like forbidding tp importation of fertilizer to produce organic foods create food shortages in the country. Mostly covid and govt is to blame for this current situation in Sri Lanka.
Note: Neputism is very common in srilanka and most of the important ministry is occupied by brother and relatives of current PM.
One country after another is starting to feel the impact of debt loans from China, indeed China has often offered assistance to poor and developing countries such as Sri langka, The increase in commodity prices in the global market has caused prices of goods and services to rise and made Sri Langka suffer a severe economic crisis, especially Sri Lanka has always been highly dependent on imported commodities from other countries so far, I think Sri Lanka is not the only country that has to lose important assets because it is unable to pay its debts to China, many other countries also have an impact due to high debt, such as Zimbabwe, Nigeria, and Uganda.
