Government defaults on $51 billion foreign debt; Health system collapses, protests escalate in Colombo
and exposed government spending fueled by debt.
Street protests over fuel, electricity, food and medicine shortages have been going on for more than a month. “We need to focus on essential imports and not have to worry about servicing external debt,” Central Bank of Sri Lanka Governor P. Nandalal Weerasinghe told reporters.
“It’s gotten to a point where paying off the debt is difficult and impossible.”
Weerasinghe said the suspension of payments would continue until the country reached an agreement with creditors and with the support of a loan program with the International Monetary Fund (IMF). Sri Lanka begins formal talks with the global lender for emergency loans on Monday.
The country has foreign debt payments of about $4 billion due this year, including a $1 billion international sovereign bond maturing in July. A coupon payment of $78 million is due on two of its bonds maturing in 2023 and 2028 on Monday, although there is a 30-day grace period.
Governor Weerasinghe said the call for repayment was made in good faith, stressing that the country of 22 million people had never defaulted on its debt.
A shipment of 11,000 tonnes of rice from India arrived here on Tuesday to help Sri Lankans celebrate the traditional national New Year due to the economic crisis. Sri Lankans will celebrate the Sinhalese and Tamil New Year on April 13-14. It is one of the biggest festivals in Sri Lanka.
The rice cargo from India reached Colombo aboard the ship, ahead of the New Year celebration by the Sri Lankan people, a statement from the Indian High Commission said. Sri Lanka is facing its worst economic crisis since its independence from the United Kingdom in 1948. “16,000 tonnes of rice supplied under India’s multifaceted support to Sri Lanka in the last week alone”, says the press release.
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