Sri Lanka defaults on debt for the first time in its history

COLOMBO: Sri Lanka fell into default for the first time in its history as the government struggles to halt an economic meltdown that prompted mass protests and a political crisis.
Policy makers had flagged to creditors the nation wouldn’t be able to make payments until the debt is restructured, and is therefore in pre-emptive default, Central Bank governor Nandalal Weerasinghe said on Thursday. Fitch Ratings also confirmed the finding, downgrading Sri Lanka to “restricted default” later in the day. The payments, originally due April 18, were worth $78 million, with a 30-day grace period that expired on Wednesday.
Sri Lanka has been mired in turmoil amid surging inflation — which Weerasinghe sees accelerating to 40% in coming months — a plummeting currency and an economic crisis that has left the country short of the hard currency it needs to import food and fuel. Public anger led the government to announce last month it would halt payments on its $12. 6 billion pile of foreign debt to preserve cash for essential goods. That marks the nation’s first sovereign debt default since it gained independence from Britain in 1948. The government shut offices and schools on Friday as the petrol shortage crippled transport across the nation. In Colombo, thousands queued for cooking gas and petrol and PM Ranil Wickremesinghe warned of a food shortage.