paid up, pay back, service debt, suspend payments on all foreign debt, unblemished record of meeting its obligations

 

Sri Lanka says it will stop servicing its foreign debt

It may be the first step towards fixing its crisis

SRI LANKA has suffered multiple crises and nearly three decades of civil war since it won independence from Britain in 1948. But it had never failed to pay back its debts. That changed on April 12th, when the South Asian island nation’s finance ministry said in a statement that it would suspend payments on all foreign debt until it had come to an agreement with creditors on how to restructure the loans. The document stressed the country’s unblemished record of meeting its obligations. But continuing to do so, it said, “is no longer a tenable policy”. Recent developments, including the economic fallout from the pandemic and the war in Ukraine, meant paying up had become “impossible”.

Though wrenching, the decision to suspend debt payments may be the first serious step towards fixing the country’s deepening economic crisis. The government’s admission brings it in line with the view of the IMF, which said last month that dwindling foreign reserves had made Sri Lanka’s foreign debt “unsustainable”. P. Nandalal Weerasinghe, who took over as governor of the country’s central bank on April 7th after his predecessor resigned, said that halting payments would allow Sri Lanka’s remaining foreign exchange to be used on imports of food and fuel while the country negotiates with the IMF and other creditors.

 to give someone the money that you owe them, especially when you do not want to: After being taken to court, they finally paid up.