Sri Lanka goes bankrupt
Sri Lanka’s Finance Minister announced that his country is not able to service its public debt normally.
Sri Lanka was due to pay $1 million in international bonds. It has $7 million to pay in the entire current year. Sri Lanka’s Finance Minister has turned to the International Monetary Fund for help. It would support the country financially and help it develop a recovery plan. Sri Lankan authorities assure that the suspension of payments is only temporary and will last until a debt restructuring agreement is reached.
Sri Lanka’s foreign exchange reserves stood at less than 20 billion dollars at the end of March. As a result of the shortage of foreign currency, the country had to drastically reduce imports. Therefore, it was short of some basic commodities, such as fuel.
The main reasons for Sri Lanka’s problems include inadequate monetary and fiscal policies and problems with tourism. The latter was also affected by the war in Ukraine. Russians and Ukrainians are some of the most frequent visitors to the island.
