For the first time, Sri Lanka defaults on its payments
Story highlights
According to the credit rating agency Moody’s, it is the first default by an Asia-Pacific nation this century
Sri Lanka has defaulted on its debt payments for the first time in its history, a day after the cash-strapped country declared it doesn’t even have money to buy fuel even for one-day.
On Thursday, Sri Lanka’s central bank governor P Nandalal Weerasinghe said that island nation had fallen into a “pre-emptive default” on its debts.
“Our position is very clear, we said that until they come to the restructure [of our debts], we will not be able to pay. So that's what you call pre-emptive default,” Weerasinghe was quoted as saying, according to BBC.
trending now
)
Hamas-run govt says 700 Palestinians killed in 24 hours as Israel intensifies operations across Gaza
)
11 climbers die in volcanic eruption in Indonesia, search ops halted due to lava discharge
)
Morning brief: Ex-US ambassador to Bolivia arrested, and more
)
India state election results: PM Modi's BJP scores a sweeping 3/4 in crucial test before 2024 final
)
New Zealand on edge: Suspicious packages with fake baby covered in blood found outside US, Israeli embassies
)
Mizoram Assembly Elections 2023 Results Live Updates: BJP ally MNF confident of securing another term
)
US shoots down drones, assists multiple commercial vessels attacked in Red Sea by Yemen’s Houthis
)
New York stabbing attack: Four killed in Queens neighbourhood as police shoots suspect dead
)
When Tom Hanks worked as Bellman and delivered a bag to Cher in her hotel room
)
This groundbreaking new drug is all set to increase life span of large dogs
)
Taylor Swift, Simone Biles bring star-power to stand during Packers vs Chiefs
)
Indian PM Modi hails four-state election results as victory of 'politics of development'
)
Godzilla x Kong: The New Empire trailer out! Titans team up to battle new monsterverse villain
)
CID star Dinesh Phadnis aka Fredericks is on ventilator support: Report
)
NY fashion designer Mrinalini Kumari who's dressed Beyonce wants Indian artisans to get the spotlight
“There can be technical definitions... from their side they can consider it a default. Our position is very clear, until there is a debt restructure, we cannot repay," he added.
Pre-emptive defaults happen when a country fails to meet some or all of its debt payments to creditors. As a result, it damages a country's reputation, making it harder to borrow the money it needs on international markets, which can further harm confidence in its currency and economy.
According to the credit rating agency Moody’s, it is the first default by an Asia-Pacific nation this century.
Last month, Sri Lanka said that it would stop servicing its international debts to wrest the dwindling foreign currency reserves, which are essential for importing key items from overseas.
Watch | Sri Lanka defaults on its debt for first time in history
It has to repay about $7bn of international loans this year, out of a total foreign debt pile worth $51bn. The country’s finance ministry has said it has $25m in usable foreign reserves.
The island nation is going through its worst economic crisis since independence in 1948.
Forty-per cent inflation, rising costs of petrol, medicines, cooking gas and other essentials has only put further misery on the people.
The economic crisis also triggered a political crisis in Sri Lanka, which led to the resignation of the country’s prime minister Mahinda Rajapaksa after violence ensued between protesters and the government supporters.
(With inputs from agencies)
WATCH WION LIVE HERE
You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.
)
