The financial times has reported that Investors are braced of the risk of Sri Lanka defaulting in paying back loans due to the impending financial crisis that could worsen. The recent rating downgrades following large tax cuts in 2019 and the loss of tourism during the pandemic have contributed to the crisis coupled with the corona situation.
While the country’s foreign reserves have dwindled to less than $3bn it is challenged with a $1bn bond repayment is due in July. If it fails to pay, it will join countries including Suriname, Belize, Zambia, and Ecuador in defaulting on its debt following the pandemic. Observed the financial times correspondents.
Meanwhile, the financial authorities in Colombo have pledged that it will serve all international loan obligations.
Finance minister, Basil Rajapaksa, has made it clear that the country is exploring all options to avoid default.