Sri Lanka is suspending its repayment of foreign debt, including bonds and government-to-government borrowings, pending the completion of a loan restructuring program with the International Monetary Fund to deal with the island nation’s worst economic crisis in decades, the government said Tuesday.
Sri Lankans for the past months have been enduring shortages of fuel, food and other essentials and daily power outages. Most of those items are paid for in hard currency, but Sri Lanka is on the brink of bankruptcy, saddled with dwindling foreign reserves and US$25 billion in foreign debt. Nearly $7 billion is due this year.
In addition to seeking help from the IMF, the government has turned to India and China for help in dealing with the shortages. Much of the anger expressed in weeks of protests has been directed at the Rajapaksa family, which been in power for most of the past two decades. Critics accuse the family of borrowing heavily to finance projects that have earned no money, such as a port facility built with Chinese loans.
He refused to yield power, saying the governing coalition will continue to rule Sri Lanka because opposition parties rejected its call for a unity government.
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