Sri Lanka defaulted for the first time in its history as the country struggles with the worst financial crisis in 70 years. According to the BBC online, the announcement comes after a 30-day grace period granted to repay $ 78 million (£ 63 million) of interest payables overdue yesterday.
Sri Lanka’s central bank governor said the country is now in “preventive default”. Defaults occur when governments are unable to meet some or all of the debt payments to creditors.
This can damage a country’s reputation, making it more difficult to borrow the money it needs on international markets, and this risks further damaging confidence in its currency and economy.
Asked if the country was now in default, Central Bank Governor P Nandalal Weerasinghe replied: “Our position is very clear, we have said that until there is a recovery, we will not be able to pay. So this it is what is called the preventive default “.
Source: Ansa
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