Assessment: Canary in a cola mine? Analysts warn Nigeria, India, Colombia, Philippines, and Turkey all bear watching, along with Russia (here)…
The tiny island nation of Sri Lanka in the Indian Ocean released a statement Tuesday that said it would default on its foreign debt, including bonds and government-to-government borrowings, amid its worst economic crisis in over seven decades.
Sri Lanka’s finance ministry said it “has had an unblemished record of external debt service since independence in 1948.”
A confluence of factors has drained the South Asian island nation’s foreign exchange reserves by more than 70% since the virus pandemic began, including the collapse in tourism and poorly timed tax cuts.
“The rich rules over the poor,
And the borrower is servant to the lender” Proverbs 22:7
(PeakProsperity’s Chris Martenson details below, the inflation riots have begun)
“Recent events, however, including the effects of the Covid-19 pandemic and the fallout from the hostilities in Ukraine, have eroded Sri Lanka’s fiscal position that continued normal servicing of external public debt obligations has become impossible,” the statement said.
Last month, the Washington-based International Monetary Fund (IMF) warned Sri Lanka’s debt is unsustainable: ”
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,” IMF said.
The socio-economic crisis unfolding on the island nation of 22 million people has already sparked mass unrest. It suffers from widespread food shortages, out-of-control inflation, and rolling blackouts.
Bloomberg notes the “unprecedented default and halted payments on foreign debt” is a move “to preserve its dwindling dollar stockpile for essential food and fuel imports.”
Read More @ Zero Hedge HERE