Sri Lanka Temporarily Suspends Servicing USD 51 Billion Foreign Debt Payments

Mumbai: The Sri Lankan government has temporarily stopped the payment of its foreign debt amid the economic crisis in the country.

According to an interim policy issued by the Ministry of Finance regarding servicing the country’s external public debt, the government has announced that it will default on its USD 51 billion foreign debt pending a bailout from the International Monetary Fund (IMF).

The ministry has announced that creditors, including foreign governments, who gave loans to the island nation, were free to encash any of their interest payments from Tuesday afternoon or opt for payment in Sri Lankan rupees.

Sri Lanka is grappling with a severe economic crisis, with a shortage of food and fuel affecting a large number of people in the island nation, resulting in massive protests over the government’s handling of the situation.

The economy has suffered a setback since the start of the COVID-19 pandemic after the tourism sector crashed.

Sri Lanka is also facing a foreign exchange crunch, which has affected its ability to import food and fuel. The shortage of essential commodities forced Sri Lanka to seek aid from friendly countries.

Meanwhile, amid massive protests Sri Lanka Prime Minister Mahinda Rajapaksa on Monday requested people to remain patient in order to enable the government to resolve the situation.

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