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World

Sri Lanka defaults on entire $51 billion external debt

  • Sri Lanka had sought debt relief from India and China, but both countries instead offered more credit lines to buy commodities from them
Published April 12, 2022

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.


Also read: Sri Lanka doubles interest rates to tame inflation as crisis bites

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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.

Comments

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Rizwan Apr 12, 2022 12:38pm
From Chinese help to default
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Shoaib Manzoor Apr 12, 2022 04:53pm
It's called international politics.
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Faheem Ahmad Apr 12, 2022 06:17pm
Hope pakistan dont get this
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K Fareed Khan Apr 12, 2022 09:43pm
It is the rational step to take. Pakistan should research Its options.
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SAMIR SARDANA Apr 13, 2022 03:16am
2000 years ago,Ashoka sent his son Mahinda and Daughter , to Sri Lanka with a sappling,of the Bodhee Tree Y ? Ashoka knew the worth of Indians.He became a mendicant, in his last days - to atone for his sins Lanka follows Theravada Buddhism - it is the Vatican of the same.The Boddhee tree in Gaya,was uprooted & burnt down many times ! The ONLY ORIGINAL BODHEE TREE IS IN LANKA ! IT WAS THE GOI WHICH USED LTTE TO RUIN LANKA FOR DECADES & DIVERT FROM ECONOMICS INTO WAR - & RUINED LANKA ! IT WAS WITH CHINESE & PAKISTAN AID THAT LANKA DESTROYED LTTE ! WHAT ARE THE TAMILS DOING IN LANKA ? WHY DOES INDIA NOT TAKE THEM BACK ? THEY ARE PREPARING FOR LTTE -2 ! IT WAS THE MACHINATIONS & TREACHERY OF THE INDIANS ,POST LTTE,WHICH PUSHED LANKA TO TAKE THE AID OF PRC & BUILD LARGE INFRA ! EVEN TODAY - INDIA IS GIVING A CREDIT LINE - & NOT A LOAN WAIVER OR A INTEREST WAIVER OR FREE AID ! dindooohindoo THE MESSAGE TO LANKA IS CLEAR - ALLOW THE PLN TO DOCK IN LANKA ON A PERMANENT BASIS.
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Azam khan Apr 13, 2022 11:11pm
Thanks to Imran Khan government. It rationalized the subsidies and dollars flood to market to keep the dollar rupees down artificially. Pakistan population took the hard time but shall live independent for ever. Sweat in peace so u don't have to bleed in war.
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Hawar Apr 15, 2022 10:05pm
@Azam khan , exactly opposite. How can youie so easily
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