Colombo: Crisis-hit Sri Lanka said it was defaulting on all payments on its $51-billion external debt after running out of foreign exchange to import desperately needed goods.
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.
“The government is taking the emergency measure only as a last resort in order to prevent further deterioration of the republic’s financial position,” a statement from the finance ministry said.
The country is due to start talks with the International Monetary Fund (IMF) next week on a loan program to get its economy back on track.
Sri Lanka’s Finance Ministry said it otherwise had an “unblemished record” of paying its dues since independence from the UK in 1948.
“Recent events, however, have eroded Sri Lanka’s fiscal position, due to which continued normal servicing of external public debt obligations is becoming impossible,” it said.
In recent weeks, demonstrators have taken to the streets of Colombo as homes and businesses have been hit with long power cuts.
The Indian Ocean island joins a list of countries like Lebanon, Argentina, Belize, Zambia, and Suriname that have failed to repay their debts.
