Sri Lanka’s debt ‘default process has begun’ – An impending doom warned by Credit Rating Agencies

Global credit rating agencies have warned that Sri Lanka’s debt default process has begun, indicating that its “payment capacity is irrevocably impaired”

Global ratings  bodies, Fitch and S&P, have impaired their assessment of the island nation, which is facing its worst economic crisis since independence in 1948.

Thousands of protesters have been demanding the early resignation of the President Gotabaya Rajapaksa and his brother and Prime Minister Mahinda Rajapaksa. The crux of this unrest is inflation, food scarcity and lack of fuel supply. This in concise hits the citizens of the island nation, as the bank pile of foreign reserves seems dim.

On 14th of April, hundreds of Sri Lankan’s celebrated their traditional new year day, opposite the president’s office. They camped outside the president’s home for the 6th consecutive day, demanding for his resignation over the worst economic crisis in the country.

Sri Lanks’s decision to suspend payments of foreign debt has put it at the pedestrian of “near default”.The Sri Lankan government on Wednesday announced that it is temporarily defaulting on all of its foreign debts payments.

Last Month itself, the IMF had assessed that Sri Lanka’s debt to be unsustainable.According to reports, at the March end, Sri Lanka’s foreign reserves stood at $1.93billion. However, it had around $4billion in foreign debt payments due this year.