Sri Lanka Declares Bankruptcy

  • Announces temporary suspension of repayment of all external debt as of 12 April
  • Pre-emptive negotiated default informed to all creditors
  • Interested creditors can claim outstanding in rupees
  • New credit facilities and any amounts disbursed under existing credit facilities after 12 April are excluded and will be serviced normally
  • Finance Ministry says move only as last resort to prevent further deterioration of SL’s financial position; will help source essential imports
  • Treasury Secretary and CBSL Chief tell journalists move follows impossibility of external debt servicing and entire $ 51 b worth external debt not being sustainable
  • SL has nearly $ 6 b of debt servicing this year and $ 25 b till 2026
  • Say ‘orderly and consensual’ restructuring of external debt obligations consistent with upcoming economic assistance program supported by IMF; help from other multilateral and bilateral partners sought
  • Rating agencies to downgrade Sri Lanka to Restrictive or Selective default status

(I wonder if this is just the first…)

Sri Lanka declares bankruptcy | Daily FT

Published by markskidmore

Mark Skidmore is Professor of Economics at Michigan State University where he holds the Morris Chair in State and Local Government Finance and Policy. His research focuses on topics in public finance, regional economics, and the economics of natural disasters. Mark created the Lighthouse Economics website and blog to share economic research and information relevant for navigating tumultuous times.

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