The decisions came at a time when the country is grappling with its worst economic downturn since independence, with regular blackouts and acute shortages of food and fuel.

“Sri Lanka has had an unblemished record of external debt service since independence in 1948. Recent events, however, including the effects of the Covid-19 pandemic and the fallout from the hostilities in Ukraine, have so eroded Sri Lanka's fiscal position that continued normal servicing of external public debt obligations has become impossible,” the Finance Ministry said in a statement.

“Although the Government has taken extraordinary steps in an effort to remain current on all of its external indebtedness, it is now clear that this is no longer a tenable policy and that a comprehensive restructuring of these obligations will be required,” the Ministry added. (ILKHA)