Sri Lanka Virtually Bankrupt: Inflation is Heading for 40 Percent

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The economic crisis in Sri Lanka is going from bad to worse. The country cannot pay off a loan for the first time since it gained independence from Britain in 1948 and is thus virtually bankrupt.

 

Nandalal Weerasinghe, the governor of the Asian country’s national bank, said that Sri Lanka would no longer be able to make payments until the debt was restructured.

Sri Lanka normally had to pay off $78 million by April 18. There was a 30-day postponement, but that deadline expired on Wednesday, so the country is now “in default”.

The island state had a hard time due to the corona crisis. Tourism was essential for the economy, but tourists stayed away en masse because of the corona. As a result, Sri Lanka ran out of money to import essential goods such as fuel and food. As a result, inflation would rise to 40 percent in the coming months, the governor warned. The crisis has also sparked violent protests.

The government talks with the IMF and its creditors about a debt restructuring. Earlier it sounded that 3 to 4 billion dollars were needed to get out of the crisis.

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