Sri Lanka’s central bank unilaterally suspends external debt payments as the country struggles with repayment. Sri Lanka's central bank 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.
“We need to focus on essential imports and not have to worry about servicing external debt,” Central Bank of Sri Lanka’s governor, P. Nandalal Weerasinghe, told reporters.
“It has come to a point that making debt payments are challenging and impossible.”
Weerasinghe said the suspension of payment would be until the country came to an agreement with creditors and with the support of a loan program with the International Monetary Fund (IMF).
The island nation's reserves have slumped more than two-thirds in the past two years, as tax cuts and the COVID-19 pandemic badly hurt its tourism-dependent economy and exposed the government's debt-fuelled spending. The country has foreign debt payments of around $4 billion due this year, including a $1 billion international sovereign bond maturing in July.
Governor Weerasinghe said the call on repayment was being taken in good faith, emphasizing that the country of 22 million people had never defaulted on its debt payments.
“We need to focus on essential imports and not have to worry about servicing external debt,” Central Bank of Sri Lanka’s governor, P. Nandalal Weerasinghe, told reporters.
“It has come to a point that making debt payments are challenging and impossible.”
Weerasinghe said the suspension of payment would be until the country came to an agreement with creditors and with the support of a loan program with the International Monetary Fund (IMF).
The island nation's reserves have slumped more than two-thirds in the past two years, as tax cuts and the COVID-19 pandemic badly hurt its tourism-dependent economy and exposed the government's debt-fuelled spending. The country has foreign debt payments of around $4 billion due this year, including a $1 billion international sovereign bond maturing in July.
Governor Weerasinghe said the call on repayment was being taken in good faith, emphasizing that the country of 22 million people had never defaulted on its debt payments.
