Crisis-hit Sri Lanka said it was halting payments on its foreign debt as its dwindling reserves of dollars were needed to purchase food and fuel.
“We have come to a situation where the ability to service our debt is very low. That’s why we decided to go for a preemptive default,” the newly appointed central bank governor, Nandalal Weerasinghe, announced during a briefing on Tuesday.
The payments on the South Asian country’s foreign debt would be suspended “on a temporary basis,” pending a bailout from the International Monetary Fund (IMF), he added.
Sri Lanka had to make some $4 billion in foreign debt payments this year, including $1 billion in July, but its foreign reserves stood at only around $1.93 billion by March.