Sri Lanka defaults on $51-bn external debt, terms it 'last resort'

"The government is taking the emergency measure only as a last resort in order to prevent further deterioration of the republic's financial position," a ministry statement said.

The immediate debt default was to ensure ‘fair and equitable treatment of all creditors’ ahead of an International Monetary Fund (IMF)-assisted recovery programme for itself, it added.

The island nation is grappling with its worst economic downturn since independence, with regular blackouts and acute shortages of food and fuel. It has caused widespread misery and led to weeks of anti-government protests.

International rating agencies had last year downgraded Sri Lank, which had sought debt relief from India and China, but both countries instead offered more credit lines to buy commodities from them.

Fibre2Fashion News Desk (DS)