Crisis-stricken Sri Lanka announces defaulting on all external debt

By Team Newsable | First Published Apr 12, 2022, 1:09 PM IST

According to the finance ministry, creditors, including foreign governments that had financed to the South Asian nation, were free to capitalise on any interest payments owing to them as of Tuesday afternoon or choose for repayment in Sri Lankan rupees.

Crisis-stricken Sri Lanka stated on Tuesday that it will default on its $51 billion foreign debt in the absence of a rescue from the International Monetary Fund. According to the finance ministry, creditors, including foreign governments that had financed to the South Asian nation, were free to capitalise on any interest payments owing to them as of Tuesday afternoon or choose for repayment in Sri Lankan rupees.

The island country is experiencing its worst economic crisis since independence, with frequent blackouts and severe food and fuel shortages.
In a statement, Sri Lanka's finance ministry stated that creditors, including foreign governments, were free to capitalise any interest payments owing to them beginning Tuesday or choose for return in Sri Lankan rupees.

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"The administration is implementing the emergency action solely as a last resort to prevent further worsening of the republic's financial status," according to the statement.

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It went on to say that the imminent debt default was necessary to provide "fair and equal treatment of all creditors" ahead of the South Asian nation's participation in an International Monetary Fund-assisted recovery programme.

The crisis has caused severe devastation among Sri Lanka's 22 million inhabitants and sparked weeks of anti-government rallies. Sri Lanka has asked India and China for debt relief, but both nations instead provided larger credit lines to buy goods from them.

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