Sri Lanka strangled by its Chinese creditor

DECRYPTION – Heavily indebted and deprived of its tourist windfall, the island is in dire straits.

Sri Lanka has so far escaped default. The country has repaid the maturity of 500 million dollars of sovereign debt of January 18, welcomed Wednesday the governor of the Central Bank, Ajith Nivard Cabraal.

The institution had renewed last week its promise to honor all its debts, including 1.5 billion dollars of sovereign bonds. But doubt hangs over the country’s ability to meet the approximately $4.5 billion in public debt maturing this year.

Debt and drastic restrictions

The island located south of India is going through a very bad patch. The financial rating agency S&P lowered its rating to CCC+ on January 12, due to the risk of payment default and the deterioration of its ability to maintain foreign exchange reserves. These reserves amounted to 3 billion dollars (2.64 billion euros) at the end of December, retorts the Central Bank, which ensures that new inflows of foreign currency will make it possible to reimburse 7 billion this year…

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