<p>Crisis-stricken Sri Lanka defaulted on its $51 billion external debt on Tuesday, calling the move a "last resort" after running out of foreign exchange to import desperately needed goods.</p>.<p>The island nation is grappling with its worst economic downturn since independence, with regular blackouts and acute shortages of food and fuel.</p>.<p>Sri Lanka's finance ministry said in a statement that creditors, including foreign governments, were free to capitalise any interest payments due to them from Tuesday or opt for payback in Sri Lankan rupees.</p>.<p>"The government is taking the emergency measure only as a last resort in order to prevent further deterioration of the republic's financial position," the statement said.</p>.<p><strong>Also Read —<a href="https://www.deccanherald.com/opinion/sri-lanka-india-bhai-bhai-but-new-delhi-should-do-more-1099964.html" target="_blank"> Sri Lanka–India 'bhai bhai', but New Delhi should do more</a></strong></p>.<p>It added that the immediate debt default was to ensure "fair and equitable treatment of all creditors" ahead of an International Monetary Fund assisted recovery programme for the South Asian nation.</p>.<p>The crisis has caused widespread misery for Sri Lanka's 22 million people and led to weeks of anti-government protests.</p>.<p>International rating agencies had downgraded Sri Lanka last year, effectively blocking the country from accessing foreign capital markets to raise much-needed loans to finance imports.</p>.<p>Sri Lanka had sought debt relief from India and China, but both countries instead offered more credit lines to buy commodities from them.</p>.<p><strong>Watch the latest DH Videos here:</strong></p>
<p>Crisis-stricken Sri Lanka defaulted on its $51 billion external debt on Tuesday, calling the move a "last resort" after running out of foreign exchange to import desperately needed goods.</p>.<p>The island nation is grappling with its worst economic downturn since independence, with regular blackouts and acute shortages of food and fuel.</p>.<p>Sri Lanka's finance ministry said in a statement that creditors, including foreign governments, were free to capitalise any interest payments due to them from Tuesday or opt for payback in Sri Lankan rupees.</p>.<p>"The government is taking the emergency measure only as a last resort in order to prevent further deterioration of the republic's financial position," the statement said.</p>.<p><strong>Also Read —<a href="https://www.deccanherald.com/opinion/sri-lanka-india-bhai-bhai-but-new-delhi-should-do-more-1099964.html" target="_blank"> Sri Lanka–India 'bhai bhai', but New Delhi should do more</a></strong></p>.<p>It added that the immediate debt default was to ensure "fair and equitable treatment of all creditors" ahead of an International Monetary Fund assisted recovery programme for the South Asian nation.</p>.<p>The crisis has caused widespread misery for Sri Lanka's 22 million people and led to weeks of anti-government protests.</p>.<p>International rating agencies had downgraded Sri Lanka last year, effectively blocking the country from accessing foreign capital markets to raise much-needed loans to finance imports.</p>.<p>Sri Lanka had sought debt relief from India and China, but both countries instead offered more credit lines to buy commodities from them.</p>.<p><strong>Watch the latest DH Videos here:</strong></p>