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Sri Lanka defaults on foreign debt Bangladesh’s $200m loan hangs in balance

Sri Lanka's largest creditors are in Asia not the West.

Sri Lanka, through repeated cycles of borrowing since 2007, has piled up $11.8 billion worth of debt through sovereign bonds (ISB), which makes up the largest part - or 36.4% - of its external debt.

The Asian Development Bank (ADB) is in second place with a 14.3% share, having lent $4.6 billion. Japan is at 10.9% and China at 10.8%, with each having lent about $3.5 billion each.

The rest of the debt is owned by countries such as India and international agencies including the World Bank and United Nations.



World bank is controlled by the west, which owns majority of the debt
 
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The guy has a point in most extreme like the run up ww2 marginal communities became even marginalised when Germans economy went down wards.

Today this truth is also evident and it's a little more complicated, than that. As the west has been in a covert war against what happened to be progressive states that coincidently happened to be Muslim. The west is also in eventual economic slow down- down turn and Asia is on a upward trend. With casual/soft fascism on the rise in the west Muslims have become the new scape goat.
So, the question remains to be answered why Muslims are the underdog? Why Muslims cannot develop their economy with building billions of tons of industrial plants? Is not it because they are incapable or unwilling to learn technologies and develop their countries by themselves.

Instead, these uneducated Muslims continuously seek Christian help for every tiny thing, but then put blame on the West for their own shortco0mings. This is what an idiot like you are doing here.

Muslims love to get divine help and this is why they keep on staying on the prayer mats. On the other hand, Christians, Buddhists or even Hindus give more time on the work floors.

Any stupid economist knows that there are rises and then fall of a national economy. It is actually slowing down. Once a nation has the required technologies to build mechanical goods, it keeps on moving forward or remain stable. By the economic theory, West will remain stable for many many centuries.

How about the Muslims? Are not they the most ignorant among all the people thinking only the Sky Power will come down to help them with everything they need?

So, keep on dreaming and cursing the non-Muslims to do far better than the Muslims.
 
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Bangladeshi debt trap rolls on.
String of T-shirts triangulation tactics at play in full force.
Soon all Sri Lankan garments factories will be handed over to BD on a 99-year lease.
 
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Instead of over dreaming on doing a few prestige projects as SL did, BD should find out that similar things were done in SL also.

Unless, BD exports rise tremendously, the loan sharks will stop lending money to BD, as well. Here goes a video footage that describes why SL is in economic problem.

I can see similarities except that for now BD is fine only because of export volume. But, the repayment volume will increase every year. Better we do not over dream.

 
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And we gave them atleast $2.5 bn as LoC and now they defaulted 🤡
SL defaulting all because of undertaking many face lifting projects that upgrade the image but hollows out the economic strength. No amount of assistance will help it out of the mess it is in.

Many 3rd world countries’ leaders talk cheap and spend high on projects that raise their personal prestige. Things they like to build look nice, but, do not pay back the investment money.
 
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SL defaulting all because of undertaking many face lifting projects that upgrade the image but hollows out the economic strength. No amount of assistance will have a elp it out of the mess it is in.

Many 3rd world countries’ leaders talk cheap and spend high on projects that raise their personal prestige. Things they tend to build look nice, but, do not pay back the investment money.
Which is why high revenue generating stuff should be built then,p the low revenue generating ones if finances are weak.
 
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Sri Lanka defaults on foreign debt Bangladesh’s $200m loan hangs in balance​

When Bangladesh agreed to provide $250 million to Sri Lanka last year, little did it think that it would become a side character in the horror show that is unfolding in the island nation.

Sri Lanka defaults on foreign debt Bangladesh’s $200m loan hangs in balance

But that is exactly the position Bangladesh finds itself in after Sri Lanka yesterday announced defaulting on its entire $51 billion of external debt -- an extraordinary move taken to preserve its scarce foreign currency reserves for essential food, fuel and medicine imports.

In March, Sri Lanka's foreign currency reserves plummeted to $1.94 billion, just enough to foot a month's import bill, but analysts estimate the usable amount is about $500 million, reports The Financial Times.

The Sri Lankan government was due to make a $36 million interest payment on a 2023 dollar bond on April 18, as well as $42.2 million on a 2028 note, Bloomberg-compiled data show. A $1 billion sovereign bond is maturing on July 25. Now, payment for all is suspended.

Sri Lanka's finance ministry said the suspension was a "last resort" as keeping up with repayments had "become impossible".

In short, the island country with an $80 billion economy is teetering on bankruptcy, thanks to an alchemy of tax cuts, foreign currency-denominated debt pile-up and unforeseeable circumstances like the global coronavirus pandemic and Russia's invasion of Ukraine.

And its only way out of the economic, financial and political meltdown -- which has caused widespread misery for Sri Lanka's 22 million people and has compelled them to take to the streets in recent weeks -- is to get help from the International Monetary Fund, which it was wont to as recently as February.

When formal talks begin on Monday during IMF's annual spring meetings for a bail-out package, Bangladesh will find a seat at the table as debt restructuring would most definitely be a lynchpin of the programme.

As per the currency swap agreement with Sri Lanka, Bangladesh was supposed to receive an interest payment of LIBOR + 2 percent were the amount returned in three months.

LIBOR, the acronym for London Interbank Offer Rate, is the global reference rate for unsecured short-term borrowing in the interbank market as a benchmark for short-term interest rates. The three-month LIBOR averaged around 0.53 percent in 2021.

Had Sri Lanka paid back in six months, the interest amount would have been LIBOR + 2.5 percent. But it failed to. Subsequently, Sri Lanka, which has a year to repay the loan, has assumed a higher interest rate.

"It would be wise of Bangladesh just to demand the principal amount back at the earliest," said Zahid Hussain, a former lead economist of the World Bank's Dhaka office.

Bangladesh was supposed to provide $250 million in exchange for an equivalent amount of Sri Lankan rupees, but it ended up providing $200 million seeing the worsening economic crisis in the South Asian nation.

"If Sri Lanka says that we will give you LIBOR + 4 percent if you take the money after two years, it would be wise to turn down the offer. That would never materialise given Sri Lanka's financial position," he said, adding that the IMF is unlikely to provide its own funds to repay loans.

Sri Lanka has previously entered into 16 relief programmes with the IMF and has stayed the course for only half of those.

The country's foreign debt to GDP ratio is to the north of 60 percent and the total debt to GDP ratio is more than 100 percent.

Not just that, its external debt carries high-interest rates and has short repayment tenure, according to Hussain.

In its statement yesterday, Sri Lanka's finance ministry said creditors were free to capitalise any interest payments falling due after 5 pm local time at an interest rate not higher than the normal contractual rate applicable to the credit.

Capitalisation is the addition of unpaid interest to the principal balance of a loan. The principal balance then increases and more interest is accrued over the life of the loan.

Or, creditors can choose to receive repayments in Sri Lankan rupees.

The latter option would have been acceptable had the Sri Lankan rupee not plunged to a record low to become the world's worst-performing currency -- worse than the currency of Russia, which is facing a cocktail of economic sanctions from the west.

The Bangladesh Bank though remains unruffled.
"We are not concerned yet -- Sri Lanka still has time to pay back," BB Spokesperson Md. Serajul Islam told The Daily Star yesterday.

Prime Minister Sheikh Hasina though called for caution when it comes to foreign debt even though it is far below risky levels.

Following a presentation yesterday on "offshore tax amnesty" and "a review of Bangladesh's macroeconomy against the backdrop of Sri Lankan economic crisis" by the National Board of Revenue and the finance division, she directed all concerned to take necessary measures so that Bangladesh could maintain its current position regarding foreign debt.

By Rejaul Karim Byron, Zina Tasreen

Years ago I was surprised by the news Sri Lanka spends almost 100 percent of gov revenue on interest and principal payments. How’s going to work in short, medium terms? Then appearing high profile projects as billions dollars beach cities. It turns out SL lives in borrowed money, all financed by loans.
 
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And these moron think default is a great idea? How naive these stupid politician.
 
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