Hit tough via the Covid-19 pandemic, Sri Lanka is going through its maximum severe economic disaster in years, elevating doubts approximately its ability to pay its lenders.
On Tuesday, the island nation repaid $500 million toward an international sovereign bond, the primary tranche of a total of $4.five billion that it needs to pay again this year, to keep away from the primary default in its history.
right here are the key information about Sri Lanka's mounting debt issues.
Sri Lanka, through repeated cycles of borrowing due to the fact that 2007, has piled up $11.eight billion worth of debt via sovereign bonds (ISB), which makes up the most important component - or 36.4% - of its external debt.
The Asian development financial institution (ADB) is in second region with a 14.three% percentage, having lent $4.6 billion. Japan is at 10.9% and China at 10.8%, with every having lent about $three.five billion every.
China has lent billions of greenbacks to Sri Lanka, partially under its Belt and road Initiative (BRI), over the past decade for infrastructure projects inclusive of highways, ports, an airport and a coal energy plant.
Critics say the funds have been used for white elephant initiatives with low returns. China rejects that grievance.
Sri Lanka has requested China to restructure its debt payments to assist navigate the financial crisis.
authorities faces multiple challenges
The government is struggling to tame retail inflation, which is walking at a decade-excessive, amid surging commodity prices. it's also suffering to meet a monetary deficit goal of 8.9% of gross home product.
in view that November, Moody's, Fitch and preferred & poor's ratings corporations have all downgraded Sri Lanka on debt default concerns. crucial financial institution governor Ajith Nivard Cabraal has stated the united states will meet all its debt repayments in 2022.
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