Hit by an unprecedented crisis, Sri Lanka yesterday announced to its creditors the suspension of the payment of the external debt, which adds up to 51,000 million dollars. The Colombo government is about to run out of foreign exchange reserves, so it has regretted having to choose between covering basic food and fuel imports or honoring its financial commitments.
The social response of recent weeks has placed the Gotabaya Rajapaksa Executive on the ropes, precipitating the first suspension of payments in the country’s history.
Although Colombo is negotiating a loan of 3,000 million dollars from the International Monetary Fund in exchange for reforms, this could take several months, so a restructuring of the debt with its main creditors, which are the World Bank, the Bank Asian Development, China and Japan. India, in the background, has been sending ships with fuel, on credit.
The protests against the shortage of gasoline, the 13-hour electricity cuts and the famine degenerated, two Fridays ago, into an attempted assault on the president’s house. Immediately afterwards, the state of exception was proclaimed, now lifted.
Likewise, all the portfolios have been renewed, after the resignation in plenary session of the government, except the president and his brother, who is prime minister. They celebrated their return to power in 2019 with tax cuts, at the gates of the pandemic. The drop in income has been lethal, combined with the collapse of tourism and inflation stemming from the war in Ukraine.