Lagatar24 Desk
Colombo, April 12: Crisis-stricken after running out of foreign cash to acquire vitally needed items, Sri Lanka defaulted on its $51 billion external debt on Tuesday, calling the move a ‘last resort.’
The island nation is in the midst of its greatest economic collapse since independence, with frequent blackouts and severe food and fuel shortages. In a statement, Sri Lanka’s finance ministry said creditors, including foreign governments, had the option of capitalising any interest payments owing to them beginning Tuesday or opting for return in Sri Lankan rupees.
Sri Lanka govt releases interim policy regarding the servicing of country's external public debt pic.twitter.com/90aNMW0KRX
— ANI (@ANI) April 12, 2022
“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 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 statement added.
The crisis has wreaked havoc on Sri Lanka’s 22 million people, sparking weeks of anti-government demonstrations. Sri Lanka was downgraded by international rating agencies last year, thus preventing it from accessing foreign financial markets to raise much-needed loans to finance imports. Sri Lanka had asked India and China for debt relief, but both countries instead provided larger credit lines to buy goods from them.
