Sri Lanka Defaults On All Foreign Debt

Sri Lanka’s central bank has said that it had become “challenging and impossible” to repay external debt, as it tries to use its dwindling foreign exchange reserves to import essentials like fuel.

Acute food and fuel shortages, alongside long daily electricity blackouts, have brought widespread suffering to the country’s 22 million people in the most painful downturn since independence in 1948.

Public anger has flared in recent weeks with crowds attempting to storm the homes of government leaders and security forces dispersing protesters with tear gas and rubber bullets. Sri Lanka’s finance ministry said the country was defaulting on all external obligations, including loans from foreign governments, ahead of an International Monetary Fund bailout.

The ministry added that Creditors were free to capitalize any interest payments due to them or opt for payback in Sri Lankan rupees. Thousands of people were camped outside President Gotabaya Rajapaksa’s seafront office in the capital Colombo in the fourth straight day of protests calling for him to step down.