Sri Lanka announces $51 billion default
Sri Lanka is facing its worst economic crisis since its independence in 1948 from the United Kingdom.
AFP - ISHARA S. KODIKARA
Text by: RFI Follow
2 mins
Sri Lanka announces that it will default on Tuesday, April 12, on its external debt of 51 billion dollars.
The country, which is facing its worst recession since independence, is awaiting a bailout from the International Monetary Fund (IMF).
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Sri Lanka is stopping its repayments to its creditors so that it can buy the essential products it needs.
For the Sri Lankan authorities, this is the "last resort" for the country short of foreign currency.
The Ministry of Finance offers its creditors, including foreign governments that have lent it money, either to capitalize the payments owed to them or to be reimbursed in Sri Lankan rupees.
The country is sinking into crisis
The executive specifies that the immediate default of payment of its debt guarantees “
fair and equitable treatment of all creditors
” before the establishment of an IMF aid plan.
The country asked India and China for debt relief, but the latter preferred to increase its lines of credit.
For several weeks, the country has been sinking into crisis.
The inhabitants, victims of shortages and monster inflation, continue to demonstrate against power, as told
by our correspondent in Colombo
,
Côme Bastin
.
They have been camping for four days in front of the palace of President Gotabaya Rajapaksa, to demand his departure.
► To read also: Hit by the crisis, Sri Lanka faces a shortage of food and medicine
“
The crisis we are going through is unprecedented.
The overflow of budgetary expenditure led to indebtedness and then to a depletion of foreign currency reserves.
In 2019, when we left power, there was $6.5 billion left.
This stock has been reduced by 80%.
And we are facing the worst inflation in Asia!
exclaims former finance minister and member of the opposition SJB party, Eran Wickramaratne.
Today, the foreign currencies that remain in the coffers are used to supply as best they can gasoline, food and even medicine to a population pushed to the limit by shortages.
Already last year, the rating agencies had lowered Sri Lanka's rating, preventing it from accessing foreign markets to obtain the loans essential to finance its essential imports.
► To read also: Sri Lanka sinks into economic and political crisis
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