Sri Lanka’s rupee took a sharp dive today following the finance ministry's official announcement that the government was defaulting on its foreign debts worth US$51 billion.
Last week, the Financial Times reported that Sri Lanka had become officially the worst performing currency in the world, performing even worse that Russia’s rouble.
Earlier today, Sri Lanka's finance ministry and governor of the Central Bank announced that the government would no longer be able to pay its international debt obligations.
"It has come to a point that making debt payments are challenging and impossible,” the newly appointed Central Bank Governor P. Nandalal Weerasinghe told reporters this morning. “The best action that can be taken is to restructure debt and avoid a hard default."
"This will be on a temporary basis until we come to an agreement with creditors and with the support of a programme with the IMF," he added.
As protests continue in the capital amidst Sri Lanka’s political and economic crisis, economists have warned that a prolonged delay in debt restructuring, could further weaken the currency.
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