Sri Lanka warns of default, halts foreign debt payments

Bloomberg

Sri Lanka warned of an unprecedented default and halted payments on foreign debt, an extraordinary step taken to preserve its dwindling dollar stockpile for essential food and fuel imports.
All outstanding payments to bond holders, bilateral creditors and institutional lenders will be suspended until a debt restructure, the finance ministry said in a statement. The newly appointed central bank governor, Nandalal Weerasinghe, said in a briefing that authorities are seeking to negotiate with creditors and warning of a possible default.
The measures are “a last resort in order to prevent a further deterioration of the Republic’s financial position,” the finance ministry said. “It is now apparent that any further delay risks inflicting permanent damage on Sri Lanka’s economy and causing potentially irreversible prejudice to the holders of the country’s external public debts.”
The government will expedite talks with the IMF, the finance ministry said, adding that it wants to avoid a hard default. Rajapaksa’s administration is also seeking aid from nations including India and China, which is one of its biggest creditors.